Workers still not returning to jobs
Loss of benefits didn’t bring people back
Gov. Mike Dewine’s decision to end the extra federal pandemic unemployment benefits was meant to satisfy a growing labor shortage amid business complaints that the extra $300 a week was discouraging workers from coming back to the job.
Has it worked?
The state’s labor force, defined as the number of people either working or actively looking for work, has increased since those benefits ran out in June, state labor data show.
But it was growing before the benefits expired. And even with the increase, the labor force remains well below where it was before the pandemic started.
The $300 weekly benefit nearly
doubled the average weekly jobless benefit paid in Ohio.
Economists say that any effect of the move to end the extra benefits has been minimal, but business leaders looked at Dewine’s decision as one tactic to address a labor shortage that has hurt the state’s economy.
“The thought we would have a huge rush (of people coming back to work) didn’t materialize,” said Ben Ayers, senior economist at Columbus-based Nationwide.
Former Republican Congressman Steve Stivers, president and CEO of the Ohio Chamber of Commerce, said the business community never saw the end of the extra benefits as the one thing that would meet the demand of employers.
“It’s not the panacea for unemployment. Hopefully, nobody painted it that way. It has been helpful,” Stivers said.
Even with the gains, Ohio needs an additional 225,000 workers to get back to the 5.9 million it had in February 2020 before the pandemic began.
There are many reasons for the labor shortage, including a wave of early retirements and a workforce fed up with low pay, bad hours, and a lack of child care and benefits, observers say.
“This idea that cutting off people’s benefits will change the landscape and they’ll come back to work is so flawed,” said Zach Schiller, research director at the liberal-leaning thank tank Policy Matters Ohio.
How has the coronavirus pandemic affected the labor market?
Ohio’s labor market has been stagnant since it peaked at 6 million workers in 2007 and 2008 as the financial crisis of that era was unfolding.
In February 2020, just before the pandemic, the labor force stood at 5.9 million workers. It fell by about 360,000 workers that April as the state’s unemployment rate soared to 16.4% when the economy was largely shut down.
Things are looking better this year. The labor force has grown by 123,000 workers since May — an exceptional gain for Ohio in any year — including 94,700 in July, August, September and October. Dewine announced May 13 that the extra $300 in unemployment benefits would end on June 26.
The growth has come as cases of the coronavirus plummeted amid widespread vaccination and people began returning to work and a semblance of regular life. In October, the labor force increased by 15,000 workers, the smallest increase since May, and the state’s unemployment rate fell to 5.1%.
Employers have searched desperately for workers over the last several months — restaurants have closed, retail shops have cut hours, the education and health-care industries have lost staff members in droves. Observers wonder how so many people can afford
not to work, but economists and others say it’s about much more than money.
Lack of child care and worries about getting COVID-19, or bringing it home, have been reasons people haven’t come back, along with a number of older workers who opted to retire. Limits on immigration have hurt as well.
“It could be one of many issues with why people are staying out of the labor force,” said Ayers, the Nationwide economist.
Vaccines, coronavirus therapeutics and rising wages are helping people back to work, including the newly retired people who might feel comfortable coming back to work today, chamber leader Stivers said.
But the state needs to address multiple issues, including child care, training workers for the skills employers say they need, and eliminating impediments such as state licensing requirements to people going back to work, he said.
Ending unemployment benefits early hurt states’ economies
The decision by 22 states to end benefits early resulted in a minimal improvement in employment in 19 of them, and it also led a big drop in spending, according to a group of researchers at University of Massachusetts Amherst, Harvard University, Columbia University and University of Toronto.
The paper, based on data through Aug. 6 and released later that month, found that employment increased by 4.4 percentage points on average in
those states. At the same time, spending fell by $145 per week as the loss of benefits led to a big, immediate decline in consumption.
Through the first week of August, average benefits for these workers fell by $278 per week and earnings rose by $14 per week, offsetting only 5% of the loss in income, according to the report.
“People who are unemployed spend that money in their local communities — grocery stores, gas stations, various small businesses,” Schiller said. “That maintains employment. They were cutting off their nose to spite their face.”
Low-wage jobs have not come back
For most middle- and high-wage workers, the economic recovery from the pandemic is about complete.
It’s a different story for low-wage jobs.
Nationally, high-wage jobs, described as those paying at least $60,000, are up 10% through Aug. 10 compared with January 2020, according to tracktherecovery.org, a website created by Opportunity Insights. The nonprofit, nonpartisan research and policy institute at Harvard University uses an assortment of public and private sector data to follow the economy’s path during the pandemic.
Middle-wage jobs, those paying $27,000 to $60,000, are up 3.3%. Lowwage jobs, those paying less than $27,000, are down 25.6%.
In Ohio, high-wage jobs are up 14.3%, middle-wage jobs have increased 7.1%, and low-wage jobs are down 18.8%.
Stivers said one possible explanation for the decline in low-wage jobs is that many have become middle-wage jobs as companies increase wages to draw and keep workers.
Most sectors of Ohio’s economy continue to be under water from the pandemic when it comes to jobs.
The leisure and hospitality sector that includes badly hit restaurants and hotels has been among the worst hit. Manufacturers have been hurt, too, along with the health-care sector, local government and a sector called “other services,” which covers various occupations from machinery repair to jobs in religion and dry cleaning and dating services.
The manufacturing sector, still a key component of Ohio’s economy, likely has been hurt by the ongoing shortage in microchips, Ayers said.
More than enough jobs to go around
The number of job openings in Ohio jumped by 46,000 by the end of September, the biggest increase of any state in the country, according to the Bureau of Labor Statistics. The state now has 389,000 openings, and there were 289,000 people listed as unemployed in October, state labor data show.
Meanwhile, the BLS data show that 162,000 people quit their jobs in September in Ohio, 3% of the state’s workers, up from 130,000 in September 2020. It was also 3% in August.
The 3% rate is the highest percentage in data going back to 2001, Ayers said.
Ayers said that while people leave jobs for a variety of reasons, workers quitting jobs for those with higher pay or a better job have pushed up the quit rate.
With workers in short supply, Stivers said employers will try to automate some functions to deal with the problem of filling low-wage jobs. That could mean, for example, that fast-food restaurants and airports turn to kiosks to take orders and check in passengers.
Meanwhile, the sector that covers transportation and warehouse jobs has jumped, employment data show, likely helped by the surge of online sales.
The national economy likely will recover all the jobs lost during the early days of the pandemic next year, but for Ohio, it figures to be longer.
“The recovery has lagged a little bit compared to the national recovery,” Ayers said.
The good news is that jobs are coming back faster than after other recessions, a rather remarkable occurrence given the powerful damage the pandemic did to the economy, he said.
“Both the Ohio and national economies have bounced back really well,” he said.
By comparison, it took several years to recover the jobs lost during and after the financial crisis.
“People are getting jobs, and people are getting paid more,” Ayers said. “That’s more of the overarching story.” mawilliams@dispatch.com @Bizmarkwilliams