Was it smart for states to cut UI benefits?

Last year about half of the states eliminated the supplemental unemployment benefit program that was launched in reaction to the pandemic.  The logic in these states, most of which had Republican governors or legislatures, was that the extra UI benefits discouraged job search.  

New research by a team of economists, including a Harvard Business School professor, indicates that only 20 percent of the unemployed workers were employed three months later.  More alarmingly, the cuts in UI benefits led to reduced spending in these states.  The math is pretty simple.  There were 1.1m newly employed workers who collectively made $900m in the states that cut benefits.  At the same time there were 3m unemployed workers who did not get to collect $7.6b in benefits.  The overall result is less spending in those states, which in turn no doubt led to reduced employment.  

So much for stakeholder capitalism?

It is one thing for CEOs to give speeches saying that employees are critical stakeholders in XYZ, Inc.  But what do large corporations do when the company gets sold?  WSJ reports that three law professors examined 116 takeovers worth $1b+ since April 2020 and examined how the proceeds of the sales were distributed.  

As you might imagine, shareholders and executives made out fine across the board.

Guess how many provided job guarantees after the sale.  Guess how many guaranteed severance payments to those laid off.  

The answer in each case: zero.  

Which corporations are really socially responsible?

Yale b-school prof and former dean Jeff Sonnenfeld has composed a spreadsheet listing the American companies that are still doing business in Russia.  That got me wondering how many of those companies signed the Business Roundtable's manifesto on the Purpose of the Corporation, a document in which 181 CEOs pledged that they would lead their companies for the benefit of all stakeholders.  These companies showed up on both lists:

• AmerisourceBergen
• Caterpillar
• Citi
• Coca-Cola
• Deere
• Honeywell
• Marriott
• McDonalds
• Pepsico
• Starbucks
• Yum! Brands

I expect they will start getting pressure from their US customers soon if they do not pull out of Russia.  Choices have consequences.