Unemployment Bonuses Have Not Deterred People From Returning to Work, Yale Study Finds

While Senate Republicans may have unveiled their new stimulus plan, the HEALS Act, earlier this week, it has already been met with criticism. More specifically, lawmakers on both sides of the aisle have criticized the plan due to its provisions regarding unemployment benefits. The HEALS Act aims to reduce unemployment benefits to $200 per week through September and then transition to benefits that would replace 70% of wages. Proponents of this plan believe that a decrease in unemployment benefits will inspire more individuals to head back into the workforce. But, a new study from Yale University has purported that the CARES Act's $600 per week in unemployment benefits did not actually deter people from returning to work.

The CARES Act, the first stimulus package that Congress issued, enhanced unemployment benefits to $600 per week. Even though some have said that the bonus may deter people from returning to work, Yale's study proves that isn't exactly the case. Yale's researchers utilized data from Homebase, a company that provides scheduling and timesheet software to small businesses in the United States, in order to come to their conclusion. According to their findings, these enhanced unemployment benefits neither deterred people from going back to work nor did they encourage layoffs. Joseph Altonji, the Thomas DeWitt Cuyler Professor of Economics in the Faculty of Arts and Sciences and a co-author of this study, said, "The data does not show a relationship between benefit generosity and employment paths after the CARES Act, which could be due to the collapse of labor demand during the COVID-19 crisis."

The study did make sure to note that they did not utilize data concerning the entire United States labor force. But, they did take a look at data tying back to restaurants, bars, retail operations, and small businesses, all of which have been disproportionately affected by the coronavirus pandemic. These findings come as lawmakers are still trying to hammer out details of their second stimulus package. This past week, much of the discussion regarding the package has concerned these unemployment benefits. Democrats, such as Speaker of the House Nancy Pelosi, have said that the HEALS Act does not go far enough in helping Americans (and, particularly, those who are unemployed) during this difficult time in the country. Pelosi told reporters on Friday about the Republicans' proposal, "Republicans in the Senate came back with a piecemeal approach. Clearly, they and perhaps the White House do not understand the gravity of the situation. This is a freight train that is picking up steam."