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Pandemic stimulus boosted spending, but didn’t stop job hunting

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Americans’ spending rose when they had stimulus cash and slowed when it ran out, according to an NBER study. Having that extra money didn’t change the American job search, the researchers said. Even as job creation returns to pre-pandemic levels, labor market participation remains low. Something is loading.

Americans have gotten some relief from their pandemic stimulus funds, but not enough to stop looking for jobs.

Increased savings, bolstered by unemployment benefits and stimulus checks during the pandemic, kept many Americans out of debt and kept spending healthy, at least before the surge. inflation has come into play in recent months.

But all that extra cash hasn’t stopped Americans from getting on with their jobs, according to a recent study by the National Bureau of Economic Research.

The non-profit research organization found this was the case because the top-ups were only temporary and “implemented in an environment where the rate of job search was already depressed”. The researchers also wrote that because the financial supplements were temporary and implemented during a recession, there was not much scope for additional funds to affect employment. In other words, people just haven’t received enough extra income to stop them looking for work.

The NBER also found that companies eventually recalled laid-off workers when they reopened during the pandemic, which also kept job search rates high.

The study counters a common conservative criticism that money from stimulus payments and unemployment insurance programs discourages people from looking for work. Many states with Republican governors prematurely cut the federal government’s $300-a-week expansion to unemployment insurance in 2021, for example.

The increase in unemployment benefits has led to a change in spending trends – but only temporarily

The study also concluded that – although jobless households have already reduced their spending during economic downturns – this has not happened during the pandemic period due to the increase in unemployment insurance benefits. . Jobless households spent more receiving $600 supplements in April 2020, then $300 supplements in January 2021.

Amid this increase in spending, the job search rate was only slightly impacted, the researchers wrote. The researchers finally said that giving people more money in a situation like the 2020 recession would give them more flexibility. They recommended that in future, “countercyclical severance-style payments” be implemented alongside stimulus payments, to give households a greater spending cushion.

The paper fleshes out the picture, but clarifies how and when the extra spending stopped — and shows that more generous unemployment benefits never really stopped Americans from looking for new jobs during the “Great Quit” pandemic. There are legitimate reasons why people have quit their jobs in droves over the past two years: the desire for higher pay, better working conditions and more fulfilling work, for example. But an unemployment savings nest was not one of them.

People are still looking for work because they can’t afford not to – but many are still out of the workforce

As the United States pulls away from its latest stimulus payments, job creation continues to surge.

The U.S. economy added 528,000 non-farm payrolls last month, the Bureau of Labor Statistics reported earlier this month, meaning overall employment is now above levels seen just before the pandemic strikes.

But there are still millions of potential workers still sitting on the sidelines, Insider’s Ben Winck reported.

The labor force participation rate, which tracks the share of Americans working or actively seeking work, slipped to 62.1% from 62.2% last month, its second straight decline. 58 million Americans are still out of the labor force, and it would take a dramatic increase in participation for the current labor supply to balance with strong business demand.

NBER researchers said the extra money had little impact on Americans’ job search, which is true more than a year after the last stimulus payment.

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