Higher unemployment benefits extend job searches

Unemployment insurance is designed as a safety net for people who lost their jobs through no fault of their own.

Economic studies show that when people are offered more generous unemployment benefits — such as a longer time horizon and higher payments — they take longer to find new jobs.

“The question is why?” said Connie Wanberg, a University of Minnesota professor and internationally known researcher in unemployment, job search and careers.

“I don’t see a lot of evidence of slackers. The U.S. has a lot of checks and balances on people looking for work.”

Wanberg’s latest research, published in June in the Journal of Applied Psychology, offers nuanced results for policymakers.

Working with an international team, Wanberg compared how varying levels of unemployment benefits in the United States, Germany and the Netherlands affect the speed and quality of reemployment as well as the level of financial and psychological stress of job seekers.

“People who perceive less time pressure don’t prioritize it as much,” said Wanberg, who teaches in the department of Work and Organizations in the Carlson School of Management.

“They have less financial strain so they didn’t spend as much time getting their resume done quickly,” she added. “They didn’t submit job applications as quickly. They weren’t networking as quickly.”

But this group also ended up with much stronger mental health and better quality jobs, something that economists studying macro-level data can’t tease out.

“People have more time to turn down jobs they don’t want or get jobs that are a better fit,” she said. “There’s more to it than income. Someone might care how far they have to drive to work.”

Based on surveys of more than 1,600 job seekers, the results held across all countries.

Job seekers who received comparatively less generous benefits got on top of the job search more quickly and found work.

But they also felt more time pressure, endured more financial strain and expressed a lower sense of well-being, the researchers found.

In the United States, unemployment insurance is funded by a tax on employers. Those receiving benefits must be available and willing to work and they must prove that they’re making an effort to find a job.

Job seekers typically receive up to 26 weeks of benefits at about 50% of their previous average weekly wage.

Most states cap the payments.

“It’s important to question how much benefit unemployment insurance provides and to clearly understand what the pros and cons are of higher vs. lower levels,” Wanberg said.

“I wouldn’t want somebody to view this as saying we provide too many benefits in the U.S. or we should cut them further,” she added. “When you take a closer look, the mental health benefits are pretty serious.”

Tom Reese, a workforce development specialist who manages the CareerForce office in Bloomington, said many laid-off workers need help moving through the stages of grief.

The center aims to help people deal with stress while also getting focused on landing a new job.

“Don’t just grab the first thing. Don’t let stress get to the point where you’re not making good choices,” he said