Skip to main content

Common Dreams. Journalism funded by people, not corporations.

There has never been—and never will be—an advertisement on our site except for this one: without readers like you supporting our work, we wouldn't exist.

No corporate influence. No pay-wall. Independent news and opinion 365 days a year that is freely available to all and funded by those who support our mission: To inform. To inspire. To ignite change for the common good.

Our mission is clear. Our model is simple. If you can, please support our Fall Campaign today.

Support Our Work -- No corporate influence. No pay-wall. Independent news funded by those who support our mission: To inform. To inspire. To ignite change for the common good. Please support our Fall Campaign today.

Cutting off the $600 will also exacerbate racial inequality. (Photo: Witthaya Prasongsin/iStock/Getty Images)

Cutting off the $600 will also exacerbate racial inequality. (Photo: Witthaya Prasongsin/iStock/Getty Images)

Joblessness Remains at Historic Levels and There Is No Evidence UI Is Disincentivizing Work

Congress must extend the extra $600 in UI benefits.

Last week 2.3 million workers applied for unemployment insurance (UI) benefits. This is the 18th week in a row that unemployment claims have been more than twice the worst week of the Great Recession. Many headlines this morning are saying there were 1.4 million UI claims last week, but that’s not the right number to use. For one, it ignores Pandemic Unemployment Assistance (PUA), the federal program for workers who are not eligible for regular UI, like the self-employed. It also uses seasonally adjusted data for regular state UI, which is distorted right now because of the way the Department of Labor (DOL) does seasonal adjustments.

Of the 2.3 million workers who applied for UI last week, 1.37 million applied for regular state unemployment insurance (not seasonally adjusted), and 975,000 applied for PUA.

A disaster of Congress’s making is looming for those who have lost their livelihoods during the global pandemic and are now depending on UI to provide for their families. If Congress doesn’t act immediately, the across-the-board $600 increase in weekly unemployment benefits will expire at the end of this week. That would not just be cruel, it would be terrible economics. These benefits are supporting a huge amount of spending by people who would otherwise have to cut back dramatically. That spending is supporting more than 5 million jobs. If Congress kills the $600, they kill those jobs. This chart shows the number of jobs that will be lost in each state if the $600 is allowed to expire.

Many are talking about the potential work disincentive of the extra $600, since the additional payment means many people have higher income on unemployment insurance than they did from their prior job. The concern about the disincentive effect has been massively overblown. In May and June—with the $600 in place—7.5 million people went back to work. And, about 70% of likely UI recipients who returned to work were making more on UI than their prior wage. Concerns about the work disincentive simply ignore the realities of the labor market for working people, who will be very unlikely to turn down a job for a temporary boost in benefits—particularly when it is now clear that jobs are going to be scarce for a very long time. Further, there are 14 million more unemployed workers than job openings, meaning millions will remain jobless no matter what they do. Cutting off the $600 cannot incentivize people to get jobs that aren’t there. Even further, many people are simply unable to take a job right now because it’s not safe for them or their family, or because they have care responsibilities as a result of the coronavirus. Cutting off the $600 cannot incentivize them to get jobs, it will just cause pain. If policymakers insist on ignoring the evidence and worrying about the theoretical work disincentive of the $600, they should address their concern by letting people keep some of their UI when they go back to work—not by cutting off the $600, which is keeping the economy afloat.

Cutting off the $600 will also exacerbate racial inequality. Due to the impact of historic and current systemic racism, Black and Brown communities are suffering more from this pandemic, and have less wealth to fall back on. They will take a much bigger hit if the $600 expires. This is particularly true for Black and Brown women and their families, because in this recession, these women have seen the largest job losses of all.

And Congress needs to act immediately. If they let the extra payments expire and then reinstate them, it will be a needless administrative nightmare for state agencies, and recipients—who will face a lapse in benefits several weeks in most states—will pay the price. It may already be too late in many states.

Figure B combines the most recent data on both continuing claims and initial claims to get a measure of the total number of people “on” unemployment benefits as of July 18. DOL numbers indicate that right now, 34.3 million workers are either on unemployment benefits, have been approved and are waiting for benefits, or have applied recently and are waiting to get approved. But caution, Figure B provides an “upper bound” on the number of people receiving the $600, for three reasons (unfortunately we only know the magnitude of the first one): 1. It includes initial claims, which represent people who have not yet made it through the first round of processing; 2. Some individuals may be being counted twice. Regular state UI and PUA claims should be non-overlapping—that is how DOL has directed state agencies to report them—but some states may be misreporting; 3. Some states are likely including some back weeks in their continuing PUA claims, which would also lead to double counting (the discussion around Figure 3 in this paper covers this issue well).

© 2021 Economic Policy Institute

Heidi Shierholz

Heidi Shierholz leads the Economic Policy Institutes’ Perkins Project on Worker Rights and Wages, a policy response team that tracks the Trump administration’s wage and employment policies. She also heads EPI’s efforts to advance a worker-centered policy agenda.

This is the world we live in. This is the world we cover.

Because of people like you, another world is possible. There are many battles to be won, but we will battle them together—all of us. Common Dreams is not your normal news site. We don't survive on clicks. We don't want advertising dollars. We want the world to be a better place. But we can't do it alone. It doesn't work that way. We need you. If you can help today—because every gift of every size matters—please do. Without Your Support We Simply Don't Exist.

Ahead of Historic House Hearing, Fresh Big Oil Misinformation Campaign Exposed

"It's always helpful to remember that big fossil fuel companies (besides being overwhelmingly responsible for carbon pollution) are also skeevy disinformation hucksters."

Jessica Corbett ·

'Very Welcome' Progress as Iran Agrees to Restart Talks on Nuclear Deal Sabotaged by Trump

One peace advocate urged all sides to reconvene negotiations "as soon as possible and with renewed urgency" to avert "disastrous" consequences for Iran and the world.

Brett Wilkins ·

House Progressives: 'When We Said These Two Bills Go Together, We Meant It'

"Moving the infrastructure bill forward without the popular Build Back Better Act risks leaving behind working people, families, and our communities."

Andrea Germanos ·

As US Makes Case for Extradition, Global Demand Rises For Assange's Immediate Freedom

"Virtually no one responsible for alleged U.S. war crimes committed in the course of the Afghanistan and Iraq wars has been held accountable... and yet a publisher who exposed such crimes is potentially facing a lifetime in jail."

Julia Conley ·

Wyden's New Billionaires Income Tax Plan Applauded as Step Toward Justice

"For too long, families have been denied basic supports... while billionaires evade taxes on obscene amounts of wealth. This dynamic is economically dangerous and morally unsustainable."

Jessica Corbett ·

Support our work.

We are independent, non-profit, advertising-free and 100% reader supported.

Subscribe to our newsletter.

Quality journalism. Progressive values.
Direct to your inbox.

Subscribe to our Newsletter.

Common Dreams, Inc. Founded 1997. Registered 501(c3) Non-Profit | Privacy Policy
Common Dreams Logo