Nancy Pelosi famously claimed that unemployment benefits are “one of the biggest stimuluses to our economy” that “creates jobs faster than almost any other initiative you can name.” Continuing to suggest as much, some have decried the end of the Emergency Unemployment Compensation (EUC) program in December.
But, as the table below displays, the early evidence suggests that there were more jobs and far more people were employed after the EUC program ended than while it operated. Specifically, in the four months since EUC ended:
- U.S. employment grew almost three times faster than in the last four months this program operated.
- Similarly, the number of jobs added to U.S. payrolls grew by 857,000, or almost 100,000 more jobs than in the last four months this program operated.
|Last Four Months of EUC
First Four Months since EUC Ended
(December 2013-April 2014)
Source: U.S. Department of Labor, Bureau of Labor Statistics. All data seasonally adjusted.
This data also confirms what has already been seen in North Carolina, which ended EUC last July. Since then, North Carolina’s unemployment rate has fallen by 1.8 percentage points (from 8.1% to 6.3%), which is primarily a result of employment growing by 63,000 in just eight months. And it is consistent with recent research from scholars at the University of Pennsylvania. Their research finds there is a “dramatic negative effect on employment…from the effect of benefit expansion on [job] creation.” Overall, they report that “benefit extensions in the recent recessions…served as the root cause of the widely documented phenomenon of the jobless recoveries.”
We have already seen that research confirmed in the fact that the longest, most expensive and most generous extended benefits program in U.S. history resulted in the slowest jobs recovery ever. Now the evidence is starting to accumulate that, when it comes to helping Americans finally return to work, the “biggest stimulus” is allowing the EUC program to expire.