Facebook Twitter

New study: Cox plan to light a fire under unemployed Utahns by nixing benefits is merely smoldering

SHARE New study: Cox plan to light a fire under unemployed Utahns by nixing benefits is merely smoldering
A roadside banner beckons potential employees outside a company in Hattiesburg, Miss., on March 27, 2021.

A roadside banner beckons potential employees outside a company in Hattiesburg, Miss., on March 27, 2021. Utah’s Gov. Cox hopes that by nixing COVID-19 unemployment benefits, unemployed Utahns will return to work.

Rogelio V. Solis, Associated Press

Gov. Spencer Cox hoped to compel more strident job-search efforts among jobless Utahns when deciding to suspend pandemic-related federal unemployment insurance benefits on June 26, more than two months ahead of their scheduled expiration.

But data from a new study suggests the plan hasn’t quite led to those outcomes, and Utah’s nation-leading economy may be at least partially to blame.

A two-part survey conducted in June by researchers from the University of Utah’s David Eccles School of Business sampled sentiments from both business owners and out-of-work Utahns, including 500 households, on outcomes from changes in the state’s unemployment benefits, among other issues.

One of the most conspicuous data points goes to the heart of Cox’s hopes that nixing extended benefits and stipends would incentivize job seekers.

“To evaluate the impact of the expiration of additional (unemployment insurance) payments, we asked respondents whether this expiration will influence the time and effort they devote to job search or their financial planning,” the survey report reads. “Over 90% of respondents state that the expiration of (unemployment) benefits will have no impact on their effort devoted to job search or their savings behavior.”

Unemployed participants in the survey also weighed in resoundingly when asked if the early cancellation of federal expanded benefits would push them to consider lower wage job opportunities — none said the change would push them to accept a lower wage job.

While the U. business school survey may not reflect the outcome Cox was looking for, one of the report authors said the circumstances behind those responses from unemployed Utahns are all about the state’s vibrant, and still improving, economic health.

Nathan Seegert is a finance professor at the Eccles School of Business and a co-author of the report, which he said is part of an ongoing project to track Utah economic indicators and sentiments.

Seegert said a combination of factors, all of which are bellwethers for a robust economy, are putting unemployed workers in a power position when it comes to chasing that next opportunity.

“The model would predict if wages from unemployment insurance went down, you’d be more likely to accept a lower wage to get out of unemployment,” Seegert said. “But that’s not at all what we’re seeing and in our survey, no one said they’d take a lower wage job.

“Part of that is consumer expectations about prices going up for goods and services and also in the housing market. While price increases are evidence of a recovering economy, it puts job seekers in the mindset that they can’t afford to jump to a lower wage.”

And Seegert said Utah’s ultra-low unemployment rate, another positive economic indicator, is also bolstering the ability for unemployed workers to be picky.

“The state unemployment rate is very low,” Seegert said. “If employees feel like they can get a new job tomorrow, it puts them in a much better bargaining position.”

Cox spokeswoman Jennifer Napier-Pearce said the Eccles report, which also highlighted a bevy of positive data from workers and business owners, was further evidence that Utah was on the right path to full recovery from the recessionary conditions wrought by COVID-19.

“This data continues to show what we have been hoping for: a return to normalcy within the economy and labor market,” Napier-Pearce said in a statement. “We want to continue to help every Utahn to find meaningful employment and to help every business thrive.

“We are once again experiencing workforce shortages and while this is a challenge for businesses, we hope every Utahn takes this opportunity to improve their respective professional opportunities.”

In May, Cox said his decision to end pandemic related federal jobless benefits to some 24,000 Utahns before the planned end of benefits in September was the right call amid the state’s rising employment and robust recovery from the impacts of COVID-19.

“This is the natural next step in getting the state and people’s lives back to normal,” Cox said when announcing the move. “I believe in the value of work. With the nation’s lowest unemployment rate ... and plenty of good-paying jobs available today, it makes sense to transition away from these extra benefits that were never intended to be permanent.

“The market should not be competing with government for workers.”

He also noted other “safety net programs” such as assistance with rent, utility, food and medical bills will still be available.

Cox is among some two dozen or so Republican state governors across the U.S. who made similar decisions about ending federal pandemic benefits in June, saying the added benefit is keeping people from wanting to work.

Labor experts say the nationwide labor shortage is not just about the extra $300 payment. Some unemployed people also have been reluctant to look for work because they fear catching the virus. Others have found new occupations rather than return to their old jobs. And many women, especially working mothers, have had to leave the workforce to care for children.

As of early June, the Utah Department of Workforce Services reported that just over 24,700 residents were drawing some type of unemployment benefits with about 12,000 getting traditional benefits plus the federally funded $300 per week pandemic stipend. Another 11,000 or so were still getting unemployment insurance benefits under federal extensions also created to blunt COVID-19 economic impacts on U.S workers. And about 1,200 Utah gig workers — people employed by companies like Uber, Lyft, GrubHub and others that are classified as contractors who are exempt from typical unemployment benefits — have also been receiving benefits under federal emergency mandates. While federal deadlines for most pandemic-related benefits for unemployed workers are set to expire in early September, Cox’s order brought them to a halt 10 weeks ahead of schedule.

As of July 24, Workforce Services reported 11,768 Utahns remained on unemployment rolls.

Some Utah lawmakers saw the early cancellation of benefits as an ill-timed change.

Following Cox’s announcement, Utah House Minority Leader Brian King, D-Salt Lake City, pointed to those factors while expressing his frustration with the governor’s decision to end the benefits in Utah.

“I mean, this is the perfect example of a disconnect between people in regular lives and people who are struggling to get back on their feet,” King said. “There are many, many people who are concerned — afraid — about returning to the workplace.”

What “frustrates me the most,” King said, is Cox’s decision “reflects this thinking of many on the other side of the aisle that people don’t want to work. That’s fundamentally wrong.”

Seegert said Utah’s enviable current economic vitality owes homage to the moves made by Cox and state lawmakers, along with federal pandemic-related economic stimulus, that have kept the state performing better than almost any place else in the country.

“Utah government responded to pandemic economic conditions extremely well,” Seegert said. “The state’s social safety nets did very well ... and leaders just had the foresight to do a lot of things to keep the economic engine running.”