JPMorgan Sees Little Sign of Workforce Gain After Benefits Cut

(Bloomberg) -- In U.S. states where governors have prematurely ended supplemental unemployment insurance programs, there’s little indication that cutting off the benefits has improved the labor markets in those states.

That’s the finding of a JPMorgan research note released Friday that examined Google searches for key words like “unemployment” and “jobs” in states that stopped enhanced payments provided in the pandemic. The analysts saw scant evidence of an increase in people looking for work in those regions.

“We do find an increase in Google searches for ‘unemployment’ in states ending benefits in the days after the announcement, suggesting increased attention to the issue,” wrote Peter McCrory and Jesse Edgerton at JPMorgan Chase & Co. “But we find little evidence for an increase in searches for ‘jobs’ that would indicate an increase in people actually looking for jobs.”

The study also noted little improvement in filings for jobless benefits, high-frequency spending or activity measures like restaurant bookings and credit card spending.

More than half of U.S. states are ending enhanced federal unemployment benefit programs amid an ongoing debate about whether they are hampering hiring efforts. As the economy has reopened, consumer demand has largely outpaced businesses’ ability to bring back workers. U.S. job openings rose to a fresh record high in May.

The debate surrounding the necessity of expanded jobless benefits is a contentious political talking point as nearly every state that has moved to end enhanced payments is led by a Republican governor. Critics of the pandemic-era federal programs -- which expanded eligibility to self-employed and contract workers and provided an additional $300 a week on top of existing state benefits -- argue that they de-incentivize people from looking for work.

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