Economic Policy Institute's Julia Wolfe has just published aggregate and state-by-state estimates of the costs to the national economy of NOT extending the the $600 weekly Unemployment Insurance benefit beyond it's current sunset date of July 31: over 5 million jobs and $500 million in personal income for the country as a whole. The report has two new interactive maps that permit users to zero in on the total UI claim numbers and the the estimated employment and income losses losses in each state.
The Northeast-Midwest region clearly has a great deal at stake in this issue. For instance EPI estimates that New York will lose 463,968 jobs, or 4.7% of its current employed workforce when the multiplier effects (1.5 X in Ms. Wolf's methodology) of the loss of income are taken into account.
The methodology used is fully described by EP as follows: "We take the relationship between the unemployment rate and the boost to personal income from the extra $600 payment that held in May of 2020 and assume it continues going forward as benefits are extended past July. We apply a multiplier of 1.5 to the personal income boost provided by enhanced UI. We then divide this boost by overall GDP, and apply the resulting percentage change to the average level of employment in the first quarter of 2020 to get an implied employment boost. The numbers in the chart are the average boost to personal income, GDP, and employment between the third quarter of 2020 and the second quarter of 2021. Some quarters would see even larger effects."
While some economists will doubtless argue that the multiplier of 1.5X is too high, others will say it's too low. I would urge that nobody in a decision-making position get hung up in that kind of debate and instead keep their eyes on the calendar and the clock as there aren't that many days left before the $600 benefit is set to expire and the inevitable economic pain sets in for the region and the nation.
Comments