Cutting off jobless benefits early may have hurt state economies.

Cutting off jobless benefits early may have hurt state economies.

When states began cutting off federal unemployment benefits this summer, their governors argued that the move would push people to return to work.

New research suggests that ending the benefits did indeed lead some people to get jobs, but that far more people did not, leaving them — and perhaps also their states’ economies — worse off.

A total of 26 states, all but one with Republican governors, have moved to end the expanded unemployment benefits that have been in place since the pandemic began. Many business owners blame the benefits for discouraging people from returning to work, while supporters argue they have provided a lifeline to people who lost jobs in the pandemic.

The extra benefits are set to expire nationwide next month, although President Biden on Thursday encouraged states with high unemployment rates to use separate federal funds to continue the programs.

To study the policies’ effect, a team of economists used data from Earnin, a financial services company, to review anonymized banking records from more than 18,000 low-income workers who were receiving unemployment benefits in late April.

The researchers found that ending the benefits did have an effect on employment: In states that cut off benefits, about 26 percent of people in the study were working in early August, compared with about 22 percent of people in states that continued the benefits.

But far more people did not find jobs. In the 19 states ending the programs for which researchers had data, about two million people lost their benefits entirely, and a million had their payments reduced. Of those, only about 145,000 people found jobs because of the cutoff. (The researchers argue the true number is probably even lower, because the workers they were studying were the people most likely to be severely affected by the loss of income, and therefore may not have been representative of everyone receiving benefits.)

Cutting off the benefits left unemployed workers worse off on average. The researchers estimate that workers lost an average of $278 a week in benefits because of the change, and gained just $14 an hour in earnings. They compensated by cutting spending by $145 a week — a roughly 20 percent reduction — and thus put less money into their local economies.

“The labor market didn’t pop after you kicked these people off,” said Michael Stepner, a University of Toronto economist who was one of the study’s authors. “Most of these people are not finding jobs, and it’s going to take them a long time to get their earnings back.”

The findings are consistent with other recent research that has found that the extra unemployment benefits have had a measurable but small effect on the number of people working and looking for work. The next piece of evidence will come Friday morning, when the Labor Department will release state-level data on employment in July.

Coral Murphy Marcos contributed reporting.


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Alex Gorsky, who has been chief executive of Johnson & Johnson since 2012, at the White House in March. He will leave the post in January.
Credit…Doug Mills/The New York Times

Johnson & Johnson’s chief executive, Alex Gorsky, will step down after nearly a decade and be replaced by one of his deputies, Joaquin Duato, at the beginning of next year, the company announced on Thursday.

Mr. Gorsky, 61, will remain at the company as its executive chairman. Mr. Duato, 59, has spent more than three decades at Johnson & Johnson and is best known for leading its pharmaceutical division.

Mr. Gorsky, who got his start as a drug sales representative and has been at the company since 1988, said in a statement that the timing was right for a change in leadership. He was also motivated by health issues in his family, he said.

Mr. Gorsky’s tenure coincided with a period of expansion and financial growth for Johnson & Johnson, which is based in New Jersey and is the world’s most valuable maker of health care products. Its stock price has nearly tripled since Mr. Gorsky took over as chief executive in 2012.

In recent years the company has grappled with a series of challenges, including high-profile lawsuits and trials, as well as the tumultuous rollout of its Covid-19 vaccine, which has been slowed by production problems and concerns about rare but serious side effects.

The vaccine is a small fraction of the company’s business, which spans medical devices, consumer products and medicines. Johnson & Johnson has vowed to sell the vaccine at break-even prices during the emergency period of the pandemic, with global sales expected to total $2.5 billion this year.

Johnson & Johnson announced in July that it would pay up to $5 billion to states and local governments to release it from all civil liability in the opioid epidemic, part of a $26 billion deal joined by several leading drug distributors.

The company has also been facing lawsuits claiming that the talc in its baby powder can cause cancer and that the company was aware of that risk even as it marketed the product. It decided last year to wind down North American sales of its talc-based baby powder.

Mr. Gorsky is likely to receive a substantial payout upon his eventual departure. He is eligible to receive previously issued grants of nearly $48 million in stock and options in the event of a voluntary termination, according to a regulatory filing from March.

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