Pandemic stimulus boosted spending, but didn't keep people from seeking jobs, new study says

• Americans' spending increased when they had stimulus cash, and slowed when they ran out, an NBER study found.
• Having that extra cash didn't change American job-hunting, the researchers said.

Americans got some relief from their pandemic stimulus funds, but not enough to stop hunting for jobs.

Increased savings buoyed by unemployment benefits and stimulus checks during the pandemic kept many Americans out of debt and kept their spending healthy, at least before skyrocketing inflation came into play over the last few months.

But all that extra cash didn't keep Americans from pursuing work, according to a recent study by the National Bureau of Economic Research.

The nonprofit research organization found this to be the case because the supplements were only temporary, and "implemented in an environment with an already depressed job-finding rate." The researchers also wrote that because the financial supplements were temporary and implemented during a recession, there wasn't much opportunity for extra funds to affect employment. In other words, people simply didn't receive enough extra income to make them stop looking for work.

The NBER also found that businesses eventually recalled laid-off workers when they reopened during the pandemic, which also kept the job-finding rate high.

The study counters a common conservative criticism that cash from stimulus payments and unemployment insurance programs disincentivizes people from looking for work. Many states with Republican governors cut the federal government's $300-per-week expansion to unemployment insurance prematurely in 2021, for instance.

Increased unemployment benefits meant spending trends changed — but only temporarily

The study also concluded that — while unemployed households have previously reduced their spending during economic downturns — that didn't happen during the pandemic period because of expanded unemployment-insurance benefits. Unemployed households spent more upon receiving $600 supplements in April 2020, then $300 supplements in January 2021.

Amid that increased spending, the job-finding rate was only modestly impacted, the researchers wrote. The researchers ultimately said that giving people more money in a situation such as the 2020 recession would give them more flexibility. They recommended that in the future, "countercyclical severance-like payments" should be implemented alongside stimulus payments, to give households more of a spending cushion.

The paper fleshes out the picture by clarifying how and when additional spending stopped, however — and shows that more generous unemployment benefits never really stopped Americans searching for new jobs during the pandemic's powering of the "Great Resignation." There are legitimate reasons why people quit their jobs in record droves over the past two years: a desire for higher pay, better working conditions, and more fulfilling work, for instance. But an unemployment benefits savings nest wasn't one of them.

People are still seeking work because they can't afford not to — but many are still missing from the workforce

As the US moves further out from its last stimulus payments, job creation continues to increase.

The US economy added 528,000 nonfarm payrolls last month, the Bureau of Labor Statistics announced earlier this month, meaning that overall employment now sits above the levels seen just before the pandemic hit.

But there are still millions of potential workers still sitting on the sidelines, Insider's Ben Winck reported.

The labor force participation rate, which tracks the share of Americans either working or actively looking for work, slid to 62.1% from 62.2% in the last month, its second straight decline. 58 million Americans are still not in the workforce, and it would take a considerable rally in participation for the current labor supply to balance out with companies' large demand.

The NBER researchers said that extra cash had little impact on Americans' job-finding, which is true more than a year after the last stimulus payment.