Return to work bonuses were always a scam

After a disappointing jobs report in April, Montana Gov. Greg Gianforte announced, “Montana is open for business again, but I hear from too many employers throughout our state who can’t find workers.” He subsequently withdrew Montana from the enhanced unemployment insurance program, which had previously added $300 a week to unemployed workers’ paychecks. This was replaced with a new ‘Return To Work” bonus, in which people who started new jobs could receive a $1,200 payment.

Ten other states followed with similar programs. Ultimately, however, most states failed to produce a “Return to Work” program that delivered the promised money. Four months later, only 1,061 Montanans have received a return to work bonus. Over the same period, the number of people who stopped receiving unemployment bonuses decreased by 6,000. While most states have not made the information about the take up of their programs public, those that have reported similarly dismal results.

There are several ways in which the ineffectiveness of these policies was baked into their design. First, most states made people apply for this program through a new web portal constructed for the bonuses. These portals were generally built months after the program was announced. What’s more, they were rife with glitches and user interface problems common to the rollout of other new programs, including the Affordable Care Act and recent Child Tax Credit.

Second, states require that workers validate their new employment for a prolonged period (usually from four to ten weeks) after being hired. This transformed the bonus from “returning to work” to “persisting in the job for several months.”  It also meant that workers had to document that they had stayed in the job by submitting pay stubs or letters from their employer to receive the bonus. In turn, those documents had to be checked and verified. 

The one exception to this was Colorado, which managed to get the “Colorado Jumpstart” bonus to over 11,000 people. Instead of building a new web portal and verification process, Colorado used its existing unemployment insurance website. As people left unemployment, they were notified that they were eligible for “Colorado Jumpstart” and given the option to sign up. They would be issued their first check four weeks later, with no additional paperwork required. 

Key to Colorado’s success was the lack of additional hurdles for receiving the bonus. Colorado easily integrated the bonus into existing systems and databases rather than creating a new system requiring people to submit paperwork to verify a new job.  Why, then, did other states create customized systems? Sam Bell of “Employ America,” a think tank dedicated to pursuing full employment, speculated that governors who “ didn’t choose [Colorado’s] path wanted the headlines about bonuses without actually having folks receive them.“ 

Most “Return To Work” programs failed in their stated goals. But even though the money did not make it to many people, “Return to Work” bonuses succeeded in one unsavory way: they gave governors political cover while they ended their state’s participation in the Federal Pandemic Unemployment Compensation program. By announcing the programs simultaneously, it seemed as though governors were replacing one program to provide aid to people who were currently unemployed with another. In truth, they were replacing a program that had been effective at supporting people with an empty promise.

Ultimately, neither the “Return to Work” bonuses or withdrawing from unemployment insurance seem to have substantially helped get people back into the workforce. Neither tactic addressed the primary barriers to employment: the increased risk of coronavirus transmission at crowded workplaces, parents’ need to be available at home if schools are closed, and the process of connecting workers and firms. If they shift their focus on these very real problems, governors can finally demonstrate that they genuinely want to help their constituents.

Matt Darling is an employment policy fellow at the Niskanen Center.