Early Evidence on the End of Expanded Federal Unemployment Benefits

Noah Williams

Executive Summary:

Beginning in May a number of states announced that they would be ending participation in the federal enhanced and expanded unemployment benefit programs instituted during the COVID-19 pandemic. In total, 26 states decided to end their participation in these programs before their scheduled expiration in September. Due to limited data, this report focuses on the first four states that ended benefits on June 12, and the additional eight states that ended them on June 19.

Data on continued claims, counting the total number of workers claiming unemployment benefits on the regular state unemployment insurance programs, is available through July 17, four or five weeks after expiration of the enhanced benefits in these states. I find that the first four states experienced a substantial drop of 26.3% in continued unemployment claims since June 5, the next eight states saw a decline of 15.1%, and the rest of the US dropped only 0.1%. Moreover, Alabama (in the group of eight) had an anomalous spike in benefits the week after expiration, which has since faded. Excluding Alabama, the other seven states in the second group saw a 21.3% drop. Since the week ending May 8, the week before program most of the terminations were announced, the first four states saw a 31.4% drop in continued claims, the next eight had a decline of 27.3% (31.3% excluding Alabama), and the rest of the US dropped by 10.2%.

Initial results suggest that the announcement and expiration of expanded unemployment benefits were accompanied by a decline in initial unemployment claims, followed by a decline in continued claims. Thus, in addition to the direct impact of reducing unemployed claimants on the enhanced and extended federal benefits programs, the terminations also reduced the number of unemployed workers filing for the regular state unemployment insurance programs, whose effective benefits were cut but whose eligibility was unaffected.

Read Full Data Brief