Unemployment Benefits Are at Heart of a Debate Over Hiring

Within two or three days of the benefit’s expiration, he said, applications tripled. When the government approved the $300 replacement, he said, the numbers began to dwindle, even though most states have yet to start making the payments.

“It’s free money, so they feel they don’t have to work anymore,” he said.

Other employers share his sentiment. One-third of small-business owners surveyed by the National Federation of Independent Business said the supplement made hiring harder.

There are, of course, examples that tell a different story — millions of them. In May, June and July, more than 9.3 million workers returned to a job, forgoing the generous unemployment benefits.

And that story turns out to be by far the most common.

Researchers at Yale University who reviewed scheduling and time clock data for small businesses said, “We find no evidence that more generous benefits disincentivized work either at the onset of the expansion or as firms looked to return to business over time.”

Five other studies by different groups of economists produced the same results.

And in a survey by Franklin Templeton-Gallup, conducted in early August, most people said extra government relief would not keep them from going back to work.

One reason is that people generally look ahead. “The latest results show that Americans rationally understand the greater long-term security of returning to work rather than relying on ongoing government assistance,” said Sonal Desai, chief investment officer of Franklin Templeton Fixed Income.

New research from economists at the University of Chicago and New York University came to the same conclusion. The extra benefits, even if extended, are fleeting. In a recession, the possibility of not getting another job offer after refusing one is scary, as is the likelihood that lower wages and career setbacks could be permanent. Stability is worth a lot.