More people receiving unemployment benefits than are unemployed, research finds

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As lawmakers on Capitol Hill squabble over the terms of an additional coronavirus relief package, new research shows that there are more Americans claiming unemployment benefits than are actually unemployed.

That scenario is highly unlikely, researchers at the Federal Reserve Bank of St. Louis wrote in a blog post this week, but has become possible because of new measures that loosened requirements to collect benefits implemented as part of the CARES Act.

“The specifics of the CARES Act allow people to receive benefits so that they do not have to report to work if their health conditions make it too dangerous,” researchers wrote in a blog post. “In such cases, the beneficiary is not technically unemployed, as there is no active job search going on. But benefits are still received through the unemployment insurance program of the person’s respective state.”

According to data from the St. Louis Fed, as of September about 12.5 million people were unemployed while around 13.5 million were making claims.

A chart shows this has largely been the case since April.

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The CARES Act provided for an additional $600 per person in unemployment benefits – on top of what is typically provided by individual states – to help individuals weather the financial effects of the coronavirus pandemic.

That policy expired in July.

Republicans were not keen to renew the measure because they claimed it eliminated an incentive for individuals to seek out new employment opportunities since, in some cases, unemployment benefits were higher than what a person would otherwise earn.

Many states have also run through a $300 weekly unemployment payment authorized by the Trump administration in August.

There are ongoing conversations between Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi, D-Calif., on the terms of another potential stimulus package.

However, so far both sides have been unable to reach an agreement on certain items, including funding for state and local governments.

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The U.S. economy lost a massive 22 million jobs at the outset of the pandemic – a little over half of which have been recovered so far.

The unemployment rate in September fell to 7.9% as the U.S. economy added 661,000 jobs, but the number of Americans seeking unemployment benefits last week increased by the largest amount in two months, to 898,000.