FGA Report Explains Mississippi's Economic Revival After Unemployment Benefits Ended

By Mississippi Center for Public Policy
February 4, 2022

The average person would agree that incentives affect behavior, though governments seem to never take a hint when it comes to things like stimulus checks and extended unemployment benefits – People will quit working when you give them money to stay home.

A new report by the Foundation for Government Accountability covers Mississippi’s “economic comeback” following the ending of its expanded unemployment benefits.

“In early 2021, Mississippi was facing the worst labor shortage in state history. By May, Mississippi businesses had more than 84,000 open jobs across the state – a record high at the time. In fact, there were more open jobs than people looking for work. Meanwhile, nearly 80,000 Mississippians were still collecting unemployment benefits – more than 10 times as many as were on the program before the pandemic hit.”

Just as any “free money” would, the federal unemployment bonuses incentivized people to stay home, rather than to return to work. Individuals were collecting more in taxpayer-funded benefits than the average Mississippian earned in wages at a full-time job. With unemployment benefits paying people to stay home, unemployment hit a high, therefore employers struggled to fill open positions, resulting in the labor shortage high. Taxpayers were paying, roughly, a terrible $38 million in benefits each week.

On May 10, 2021, Governor Reeves announced that the state was ending the federal unemployment expansions. Following the announcement, work search activities immediately spiked, with Mississippi businesses hiring more than 72,000 workers in the month of June alone. This was the largest hiring spree in its history. One week after the expanded benefits expired, the costs of taxpayer-funded benefits plummeted to just $2.8 million.

“As one of the first states to opt-out of the federal bonus and expansions, Mississippi deserves credit for setting the stage for other states to follow suit, and for Congress to eventually end the expansions nationwide.”

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