Will Cutting Unemployment Benefits in America Alleviate Labor Shortages?
AREOPENING OF AMERICA S for businesses, labor shortages continue to worsen. Businesses are posting more than 9 million vacancies, the highest on record. The bosses complain that they cannot find people to serve drinks, staff checkouts or drive trucks. So, in an attempt to eliminate shortages, half of the states are ending a weekly top-up of $ 300 to unemployment insurance (User interface), in place since January, as well as other User interface programs. Is this change having the desired effect?
It depends on who you ask. June 27, the Wall Street newspaper published an article on Missouri, a state that abolished the supplement on June 12, saying people were flying off unemployment lists. The same day New York Times also published an article on Missouri, which almost exactly drew the opposite conclusion. The reality lies somewhere between these polarized extremes. Making benefits less generous may help the US labor market a bit, but other factors further explain labor shortages.
Removing the $ 300 weekly supplement certainly makes life on welfare less comfortable. At this level, 40% of people earn more than they were in their previous job. However, it is difficult to say at this time whether the imposition of harsher conditions translates into more vigorous job searches. The first four states to abolish the supplement did so too late for the effect, if any, to show up in the latest jobs report, released on July 2. In the meantime, economists must use high-frequency data, such as online job listings and weekly figures on applications for User interface, which are less reliable.
These suggest that a miser User interface makes the difference. Analysts at Morgan Stanley, a bank, and economists at the Federal Reserve in St. Louis find that continued demands for User interface fell the most in the “finishing” states. Other research reveals similar trends in new claims User interface. But there is enough to cloud the picture: Daniel Zhao of Glassdoor, a job search website, adds a note of caution, noting that new applications are already declining faster in reforming states.
It won’t be until the August jobs report, released in September, that the fools have a better idea of what’s really going on at the state level. It seems likely, however, that aggregate employment in America will be somewhat higher by then than it would have been without the reduction in User interface. A survey from Indeed, a job search website, suggests that a tenth of the ‘not urgent’ unemployed looking for a job feel this way because of User interface Payments.
What is clear, however, is that there are other important reasons why so many workers seem reluctant to be employed. Across America, job vacancy growth continued to increase in June and early July, according to Indeed. This suggests that workers are unlikely to flock to the door for an interview just because their additional benefits have ended.
Family responsibilities are a major barrier to returning to work (in-person schooling should not resume until the fall). A pile of “excess” household savings accumulated during the pandemic, totaling more than $ 2 billion in total, made it easier for many Americans to withstand a period of unemployment, say until quitting. ‘they find the perfect job. Others depend on the salary of a spouse or partner. In addition, the fear of catching covid-19 still apparently holds many people back. Who would choose to be a chef, when research suggests that virtually no other profession has a higher risk of dying from covid-19? Until this threat subsides, expect labor shortages to continue. ■
This article appeared in the Finance & economics section of the print edition under the title “Make it pay”