California Policy Lab

At the start of the pandemic, Congress temporarily expanded Unemployment Insurance (UI) programs through the federal CARES Act In this report, we mainly focus on Pandemic Emergency Unemployment Compensation (PEUC), which expanded the weeks of UI eligibility This and other emergency provisions were set to expire on September 4, 2021, which is commonly referred to as a “benefts clif ” However, policymakers in some states chose to end these programs before that date This policy report evaluates the impact the expansion and expiration of these programs had on the US labor market using data from the U S Department of Labor, the Current Population Survey, and California’s Employment Development Department Using national data, we fnd the benefts clif caused a dramatic drop in the proportion of unemployed workers that are covered by UI, which was three times as large as a similar clif at the end of the Great Recession To measure coverage, we focus on the UI recipiency rate, which is the share of jobless workers who received UI benefts In comparison, gains to employment were modest at most Our primary measure of employment is the percentage of the adult population that is employed in each month Data on the demographics of extension program benefciaries is only available in California, and it suggests that workers from disadvantaged backgrounds were disproportionately afected by the expirations In California, UI claimants who were relying on the PEUC extension program when it expired were more likely to identify as Black or women Older and less educated workers were also more impacted by these programs expiring As a whole, our results paint a positive picture of the efects of the federal UI expansions on the U S labor market Our fndings of a dramatic decline in UI recipiency without a meaningful rise in employment imply the pandemic UI expansions increased coverage and bolstered incomes of unemployed workers without a substantial efect on employment As in many other studies, these results rely on comparisons of changes in outcomes between states over time The assumptions underlying our research design are discussed in further detail in the report.

This work has been supported, in part, by the University of California Multicampus Research Programs and Initiatives grants MRP-19-600774 and M21PR3278