Did generous unemployment benefits discourage many workers from returning to their jobs? A big drop in people seeking or receiving benefits in the past two weeks after the end of a $600 federal stipend hints the answer might be yes.
Initial jobless claims fell to 963,000 in early August, a decline of almost 500,000 from two weeks earlier. New applications had largely been flat at around 1.5 million a week from June to mid-July.
The number of peopled receving benefits, meanwhile, tumbled by 1.5 million in the last two weeks of July to 15.49 million just as the benefit was expiring. That’s the lowest level for these so-called continuing claims since early April.
Some economists say it’s no coincidence new and continuing applications for benefits began to tumble right around the July 31 expiration of the federal stipend.
“This is not rocket science, folks. When you pay people more to sit at home than to go back to work, they sit at home,” said chief economist Stephen Stanley of Amherst Pierpont Securities. “When you don’t, if they are offered a job, they go back to work.”