Ending unemployment benefits had little impact on jobs and fueled $2 billion spending cut, study finds

States that withdrew early from federal unemployment programs pushed few people back to work and fueled a nearly $2 billion cut in household spending, potentially hurting their local economies, according to new research.

Twenty-six state governors — all Republican, except one — opted out of the pandemic-era programs several weeks before their official expiration on Labor Day. Enhanced benefits were keeping the unemployed from looking for jobs and fueling a labor shortage, they claimed.

That bet seems to have had a limited payoff so far, according to a paper authored by economists and researchers at Columbia University, Harvard University, the University of Massachusetts Amherst and the University of Toronto. The research was published Friday.