House Republicans falsely claim cutting off emergency unemployment aid spurred job growth

House Republicans are incorrectly claiming that state GOP efforts to cut off emergency pandemic unemployment benefits actually improved job growth. Numerous analyses have shown no evidence to support that argument.

On Friday, the Republican minority on the House Ways and Means Committee put out a statement asserting that a Friday jobs report “confirms that GOP governors who answered House Republicans’ call to end unemployment bonuses that paid many jobless more to stay home than to work are seeing greater job gains in their states.”

Texas Rep. Kevin Brady, the committee’s top Republican, claimed, “As Republicans predicted, new unemployment reports show that states ending President Biden’s anti-work unemployment bonuses have stronger job growth than states that continue them. Republican governors deserve credit for the improved July jobs report.” He warned that any extension of the payments beyond their Sept. 6 expiration would be “economically reckless.”

“Less #Biden anti-work unemployment checks = stronger job growth. #GOPgovernors deserve credit for improved July jobs report,” Brady tweeted on Monday.

The benefits in question were part of the American Rescue plan, President Joe Biden’s $1.9 trillion relief package. The law — passed in March without a single GOP vote — provided a $300-a-week federal subsidy to Americans who were temporarily out of work due to the coronavirus pandemic.

After the bill’s enactment, Republican lawmakers in Congress and several GOP governors argued that the unemployment benefit amounted to “paying people to be idle” and pushed to end it early. Some red states blocked the payments to their own unemployed citizens, hoping it would encourage them to fill job vacancies.

But it quickly became apparent that elimination of the payments did little or nothing to fuel job growth.

An August 4 CNBC report noted that the 26 states that opted to stop the payments in June or July saw hourly worker shifts grew at only about half the speed of states that kept the benefits.

On Friday, the Bureau of Labor Statistics released its “State Employment and Unemployment” report for July. According to Politico, just eight of those 26 states saw a significant unemployment drop for the month.

“There’s no sign of the end of supplemental UI [unemployment insurance]” impacted employment, Mark Zandi, chief economist at Moody’s Analytics, told the paper. “There’s just no evidence.”

“The idea was that there were lots of jobs — it was just that people weren’t looking. That was the narrative,” University of Massachusetts economist Arindrajit Dube, who authored one of several studies finding minimal benefit to states that stopped the payments, told the New York Times on Friday. “I don’t think that story holds up.”

“I’ve seen enough,” tweeted Nobel Prize-winning economist Paul Krugman, “the red-state rush to cut off aid to the unemployed did not do much if anything to create jobs, but did create vast, gratuitous hardship for millions of Americans.”

A Brady spokesperson did not immediately respond to an inquiry for this story.

Overall, job growth is way up since Biden took office in January. After Donald Trump saw a net loss of more than 3 million jobs over his single term in office, Biden has gained about 4.1 million over the first six months of his presidency.

Published with permission of The American Independent Foundation.