US Jobs Outlook: States That Cut Unemployment Benefits Didn't See Employment Growth

Twenty-six states cut their pandemic unemployment programs in 2021 in an effort to speed up job searches. According to analysis, the move has not meant higher employment.

State officials said the financial assistance was preventing unemployed workers from looking for jobs.

But Census Bureau data suggests recipients didn’t rush to find jobs following the first batch of state withdrawals, Arindrajit Dube, an economics professor at the University of Massachusetts Amherst, told CNBC. In fact, the first states to withdraw support didn’t see any jump in jobs in the weeks following their withdrawal.

CNBC cited Dube's analysis which showed "that the share of adults with a job fell by 1.4 percentage points over the same period."

Susan Houseman, research director at the W.E. Upjohn Institute for Employment Research, said there is no evidence that federal benefits constrain people from finding jobs.

“You could argue, maybe it will take people longer to find jobs than a couple weeks,” Houseman told CNBC. “We’ll have to continue to track [it].”

Some states started withdrawing from unemployment benefits as early as mid-June. The move came amid the federal stimulus packages in 2021 to boost the economy.

Most states that withdrew from some or all federal unemployment benefits were run by Republicans.

Economists say the U.S. economy has been shifting during the pandemic. Steady growth is expected as more businesses reopen.