Chopping Unemployment Benefits Trims Jobless Numbers
US has seen a steady downfall in unemployment rates during the year 2014. As we prepare to press this article into publication, we hear some great news from the Bureau Of Labor Statistics, U.S Department of Labor. “Employment Situation”, the monthly news release added icing on the cake with revelation of unemployment rate for Feb 2015, which stood at 5.5 %, the lowest in years.
So what really triggered such a massive downfall? A combination of stimulants actually. Factors such as strong economic growth & even job creations across sectors and industries are the “key” contributors. However, a recent study sponsored by the National Bureau of Economic Research has thrown light on some startling facts by giving credit to “Cutting Unemployment Benefits”.
The study concluded that withdrawal of federal sponsored unemployment benefits extension in Dec 2013 resulted in 1.8 Million jobs being added in 2014.
Emergency Unemployment Compensation
The E.U.C as its popularly known, was a life saver program sponsored by the federal set up in 2008 during peak of recession when thousands of jobs were lost. It provided additional weeks of unemployment compensation to those jobless claimants who had exhausted the regular state provided benefits.
This program expired in Dec 2013, with no signs of renewal by the Congress which was of the opinion that the economy and jobless situation was stable and there was no need to burden the exchequer by reviving the E.U.C. It created an air of panic amongst the unemployed class, who were dependent on the monetary compensation to manage the basic expenses while they looked for jobs.
Led by Kurt Mitman, a group of fellows at National Bureau of Economic Research, carried out exhaustive study during this restless period starting early 2014 & released the papers in January this year.
The researchers used Local Area Unemployment Statistics dataset that reports county level data. They compared and analysed similar economic areas which had a variation in the unemployment compensation disbursed. Remember, during the study phase, there was a variation in the benefits offered in different states. The study points out that the average compensation weeks tumbled from 53 weeks to 25 weeks after the Emergency Unemployment Compensation program expired.
The study concluded that cutting the federal sponsored benefits had resulted increase in employment across the country. The monthly data from the BLS further strengthens this finding. More people applied for jobs since the cut that led to decrease in jobless workers across sectors.
Present Day Situation
The unemployment rates have surged in a phased manner, improving month on month, beating post recession blues. About 295,000 jobless were added in the month of February 2015 & the unemployment rate stood strong at 5.5%, a decrease of 0.1 percentage point from January 2015.
If you were laid off recently and scouting for jobs, apply for unemployment insurance that provides you weeks of monetary compensation to to help you manage day to day expenses.