Economic Impact Of Federal UI Subsidy On Work Discouragement – And What Nonprofits Need To Do Next

Earlier this week, the Federal Reserve Bank of San Francisco put out new research on the effect the $600 Federal Unemployment Insurance subsidy had on discouraging workers from returning to work. 

The subsidy was initially put in place to bolster families affected by COVID-layoffs and the catastrophic effect the disease had on the US economy. In some cases, this resulted in beneficiaries receiving more each week from state UI and subsidy than they had been making at their job before unemployment.

In August, as the program came to an end, senior White House aides claimed “that a jobless benefit was too generous would discourage people from going back to work,” and in fact, the $600 per week subsidy fit in that category.

The new research report shows that was not the case. The “available aid would not outweigh the value of a longer-term stable income in workers’ decisions to accept job offers,” and that “evidence from recent labor market outcomes confirms that the supplemental payments had little or no adverse effect on job search.”

These decisions to cut and now eliminate subsidies for unemployed Americans have disproportionately affected BIPOC and low-income earners. Many are facing eviction, homelessness, food shortages, and widening educational gaps for their children. As leaders in the nonprofit section, we must continue to advocate for fair and equitable treatment for those who continue to shoulder the burden of this crisis, and have, again and again, made sacrifices during this terrible time.

Kaplan Strategic Partnerships has over 20 years of experience helping organizations find creative ways to impact their communities in times of crisis. Contact us today to discuss how we may help you achieve your goals as you continue to pivot to assist your community during COVID.

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