Many economists are racing to assess whether widespread U.S. federal unemployment benefits are really preventing workers from returning to work. They say a variety of factors have contributed to the current labor shortage. However, early indications are that the labor market recovery is accelerating in states that ended federal supplemental benefits early.
Severe labor shortages across the nation have prompted 26 states, all of which are led by Republican governors, to opt out of the expanded benefits program before it expires on Sept. 6.
The impact of the initiative on employment data will not be fully apparent until the July jobs report is released in early August. However, among states that ended the $300-a-week additional unemployment benefits early, the number of people claiming regular unemployment benefits is accelerating, and similar results were found for first-time claims.
According to Jan Hatzius, chief economist at Goldman Sachs, the expiration of unemployment benefits “could bring favorable conditions for hiring in the coming months.
In a June 11 report, Hatzius wrote, “Our underlying assumption is that benefit expirations will drive job growth of more than 150,000 in July and more than 400,000 in September.” However, he noted that there is significant uncertainty in these estimates.
Some other early signs hint at a rapid recovery in these states. For example, ZipRecruiter, a U.S. job board that serves job seekers and employers, has found that the number of people applying for jobs is growing rapidly.
According to ZipRecruiter’s job search data, comparing the two weeks ending June 12 with the two weeks ending June 19, there was a 7.6 percent jump in the number of applications submitted in states such as Alaska, Iowa, Mississippi and Missouri, where supplemental benefits ended on June 12. The percentage was only 1.3 percent in states that maintained benefits through Labor Day (Sept. 6).
In states where benefits were scheduled to end on June 19, 26 and 27, the results were even higher, between about 11.5 and 15 percent.
Julia Pollak, a labor economist at ZipRecruiter, told the Epoch Times, “Job search websites have more frequent data on job search activity and are a valuable source of information to understand what’s happening in real time.”
To observe trends in the labor market, ZipRecruiter is tracking the number of clicks, applications and searches by state job seekers in response to the expiration of additional unemployment benefits.
Pollack said there was little variation by state before June. However, after the week ending June 5, some indicators picked up in those states that ended enhanced benefits.
“But it’s too early to be sure.” Pollack said.
Millions of Americans have yet to find work, but many business owners are still having trouble filling jobs. As the economy continues to recover, U.S. employers posted a record 9.3 million job openings in April, showing that jobs are opening up faster than businesses can fill their workforce.
Home Grounds, based in Westbury, New York, is a small business that provides online community and professional content for coffee lovers. The company has been looking to grow during the COVID-19 pandemic online boom, but has struggled with a lack of staff.
“You’d think a digital business would be the easiest to find workers during and after the pandemic,” Home Grounds CEO Alex Mastin told The Epoch Times, “but it’s been a big test. “
HomeGrounds launched in 2015 and was recently acquired by digital media company Blexr. The online platform is looking to hire 10 people, including online content creators, search engine optimization experts, web developers and user experience specialists. All positions are available to work remotely, which should be a good fit for job seekers who are concerned about the COVID-19 outbreak and have not yet returned to work.
“We tried a variety of strategies.” Mastin said, including headhunters, incentives and simply applying, but “we didn’t find a magic solution to the problem.”
Many business owners say they can’t compete with federal benefits that encourage people to stay home rather than look for work. The U.S. Chamber of Commerce is calling for all remaining states to end the $300-a-week unemployment benefit early to address “the nation’s worsening workforce crisis.
However, many Democrats and economists do not believe that raising unemployment benefits is the key to the imbalance between labor supply and demand. They argue that factors including lack of child care, ongoing health risks, skill mismatches and unemployment benefits combine to prevent people from returning to work.
Concerns about COVID-19 are the main deterrent to returning to the workforce, according to a survey by global workforce research firm Indeed Hiring Lab.
The survey, which interviewed 5,000 Americans between the ages of 18 and 64, found that only about 10 percent of respondents were eager to find a job. The survey revealed that spousal income, household savings and increased unemployment benefits were the reasons that kept people waiting to work from rushing to find a job.
“This is now a bargaining chip for employees,” President Joe Biden told reporters at the White House on June 24.
According to Biden, the solution to attracting workers is to “give them more pay.
Bonuses and job offers with other incentives are on the rise. According to ZipRecruiter, the percentage of job ads offering signing bonuses has increased from 2 percent to 20 percent recently due to labor shortages.
Focus Insite CEO and founder Jim Jacobs told the Epoch Times, “We’ve hired 20 people this year, but it’s getting harder and harder.”
The Pennsylvania-based company is a market research firm that provides recruiting services for focus groups, online research and interviews.
“Why would people work when they can make $47,000 a year on unemployment?” Jacobs said.
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