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1 1 (June 24, 2022)

handle is hein.crs/govehwy0001 and id is 1 raw text is: Congre s&cnaI Resedrch Ser/ce Inf ormning I eg iltive debate sine 1914 June 24, 2022 How Did COVID-19 Unemployment Insurance Benefits Impact Consumer Spending and Employment? The COVID-19 pandemic dramatically disrupted the economy with mass layoffs and business closures. The economy was shocked with stay-at-home and shutdown orders designed to limit person-to-person contact. These restrictions on the flow of labor and commerce reduced economic demand. They also increased the number of workers unable to work. Additionally, the increased workplace hazards created by the COVID-19 pandemic further limited certain jobseekers' options for employment, creating unusual shifts in the labor market. Congress recognized the potential threat that such massive earnings losses posed to the national and global economy and responded by augmenting the joint federal-state Unemployment Insurance (UI) system to maintain the economy, among many other measures that provided income support. Recent studies have examined the impact of these UI expansions on consumer spending and employment. UL Benefits During the Pandemic Congress enacted key changes in the UI system in response to the high levels of unemployment resulting from the COVID-19 pandemic and recession (February 2020 through March 2020). Typically, the UI system provides income support to unemployed workers through weekly benefit payments. UI payments help (1) provide temporary partial wage replacement to involuntarily unemployed workers and (2) stabilize the economy during recessions. Permanent-law UI programs-Unemployment Compensation (UC) and Extended Benefits (EB)-automatically respond to layoffs and business closures. However, unprecedented job loss during the COVID-19 pandemic prompted Congress to enact a series of extraordinary measures: Federal Pandemic Unemployment Compensation (FPUC), Pandemic Emergency Unemployment Compensation (PEUC), and Pandemic Unemployment Assistance (PUA). These UI measures helped to maintain consumer spending and stabilize the economy during this period. PEUC was similar to congressional actions taken in previous recessions as it extended the availability of regular UC benefits (available for up to 26 weeks) for up to an additional 49 weeks. However, two of these interventions, FPUC and PUA, were unprecedented when compared to responses during previous recessions. FPUC provided a weekly supplement on top of all UI benefits. FPUC provided a $600 weekly supplement between April and July 2020 and was reauthorized at $300 weekly from January 2021 through the beginning of September 2021. FPUC payments from April 2020 through September 6, 2021, totaled $442.3 billion. * PUA uniquely expanded the population eligible for UI to include the self-employed, gig workers, and others not previously eligible for UI or those unable to work for certain COVID-19-related reasons. PUA payments totaled $131.2 billion. Research on the COVID-9 UI Benefits An emerging research literature leverages new and rich sources of data to examine both (1) the role that COVID-19 UI benefits-particularly FPUC and PUA-played in boosting spending and consumption in U.S. households that experienced unemployment and (2) whether the supplemental UI benefits decreased the likelihood that unemployed workers found work. A strength of recent studies is their use of new sources of data to evaluate UI impacts, particularly on personal consumption patterns. Measuring the personal consumption response to government programs is traditionally challenging. Data on consumption are scarce and often contain significant measurement error, which makes statistical inference difficult and imprecise. The research discussed below, however, benefits from new proprietary data sources that harness anonymized bank account and lending data to provide weekly information on income, spending, and employment. Additionally, the research uses another new source of household level data: the Household Pulse Survey, an experimental weekly survey conducted by the Census Bureau in collaboration with several federal agencies that includes information on individuals' employment status, spending patterns, food security, housing, physical and mental health, access to health care, and application for and receipt of benefits. Some studies of employment effects are also strengthened by the ability to analyze job applications to an online jobs platform. However, research findings related to the impact of the COVID-19 UI benefits may not be generalizable to other periods or labor market conditions. The COVID-19 recession was created by an abrupt, exogenous shock attributed to public health and safety concerns rather than a series of economic stresses, which are associated with a more typical recession. Additionally, the federal response to the pandemic included several other forms of assistance to employers and employees-such as the Payment Protection Program, the Employee Retention Tax Credit, and Economic Impact Payments to households-that may also have affected personal consumption and the incentives for employment. COVID-19-specific factors, such as the availability (or scarcity) of vaccines, childcare, and in- person school, may have also contributed to unusual patterns in returning to work during this period.

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