More states are ending jobless benefit, but will workers return?
As funds end, are workers returning?
Experts disagree about whether the extra $300 payments have made people reluctant to search for work.
Julie Antoine wants to go back to work.
The 60-year-old unemployed travel agent used to make around $7,000 a month working in Gainesville, Florida. But since losing her two jobs at the start of the COVID-19 pandemic in March 2020, she has relied on the state’s unemployment benefit, which tops out at $275 a week, an amount equal to what Antoine used to make in two days.
“It is nothing close to what I was earning ... even with the (extra) $600 and the $300 that they were giving,” she says of the temporary federal boosts to Florida’s unemployment checks. “I’d rather work and make $7,000 a month than not work and make $1,100.”
The economy took a major leap forward in June when employers added 850,000 jobs. But many businesses say they are struggling to find workers, a shortage that some employers and Republican lawmakers blame on the federal jobless aid, which they say discourages people from returning to work.
Economists disagree about whether the extra assistance is holding back job searches, even as 26 states end the federal boost of $300 a week before it officially ends on Sept. 6.
What’s clearer is that some workers, particularly those who earn low wages, are being more selective about where they work. They’re determined to find better paying, more fulfilling jobs than the ones they left or lost during the pandemic.
“They know they’re going to have to go back to work,” says Andrew Stettner of The Century Foundation, a leftleaning think tank. “People are looking for the right job that comports to their feelings of security and safety.”
Is unemployment aid a barrier?
People have not returned to work for several reasons, including a lack of child care and concerns about CO
VID-19, says Aneta Markowska, managing director and chief financial economist for Jefferies LLC. But the federal unemployment supplement has “definitely been one of the factors.”
Once states announced in mid-May that they would end the enhanced federal benefits early, the number of people collecting the aid in those states dropped nearly 13% over the next month, Markowska says. In the rest of the country, those ongoing jobless claims dipped just 3.4% over that same period.
“Employers are having to compete with these programs,” she says, particularly those in the leisure, hospitality and retail industries that typically pay workers the lowest wages. “In most cases in those industries, people actually make more on these benefits.’’
States that are cutting off the extra federal assistance echo those concerns, saying they are ending the $300 supplement early, as well as some other federal benefits, to help small businesses and boost the overall economy.
“Although more people are ready to work today in Arizona than before the pandemic, many businesses are struggling to fill vital positions,” Arizona Gov. Doug Ducey said in a statement announcing the end to the federal benefit as of July 10. “We cannot let unemployment benefits be a barrier to getting people back to work.”
But Ashlee Lindsey, 38, says that unemployment benefits have been a financial lifeline, not a barrier, as she struggles to find work.
A single mother of two who lives in Montgomery, Alabama, Lindsey says she was shocked when her state cut off the extra federal aid in June.
Alabama Gov. Kay Ivey cited the state’s unemployment rate of 3.8%, which she said was the lowest in the Southeast and below the national rate when she announced the end of federal benefits in May.
“I didn’t ask for this pandemic,” says Lindsey, who has signed a petition calling on Alabama to reinstate the federal benefits. “What I ask is that our lawmakers do what they promised, which is to help their citizens. We’re drowning.”
Lindsey is receiving no assistance because the federal supplement was the only jobless aid she qualified for.
A substitute teacher getting a master’s degree in education, Lindsey doesn’t expect to return to work until at least the fall. And she’s encountered an unexpected hurdle when applying for hourly jobs at grocery and retail stores. She’s overqualified.
“I didn’t go to school to get told I’m overqualified to make money,” says Lindsey. “Single mothers are the only means of support for our families ... How can you pay for day care when you don’t have money? I need to provide for my children.”
Most prefer jobs over benefits
Many economists say boosted benefits don’t generally stop people who are unemployed from seeking jobs.
Homebase, which provides employee scheduling software, says employment actually grew 1.7% more slowly last month in states that are eliminating the $300 federal aid early.
The Century Foundation says that in the four states that ended the $300 federal bonus on June 12, claims for state benefits rose by 3.7% from June 12 to June 19 while applications climbed just 1% during that period in the other 46 states and Washington, D.C.
A paper published in May by the Federal Reserve Bank of San Francisco found that if 7 of 28 people receiving the $300 federal boost were offered a job in a given month, only one would refuse the position because of the extra assistance.
“When we’re thinking about the typical individual who’s unemployed during the pandemic ... the supplemental income we found wasn’t enough to deter accepting a job offer to return to work at their previous earnings,’’ says Nicolas Petrosky-Nadeau, an economist at the Federal Reserve Bank of San Francisco and co-author of the analysis.
However, in June 2020 when the weekly federal supplement was $600, Petrosky-Nadeau says some lowerwage workers may have been more inclined to stay on benefits than to immediately go back to work.
But those workers may also have turned down jobs that would require them to be in public spaces during the height of a pandemic, he says. Generally, people prefer a job, which offers experience and contacts as well as money, Petrosky-Nadeau says.
Child care, COVID stop searches
Rather than wanting to stay home and collect unemployment, many Americans are having a hard time getting back in the workforce because they don’t have someone to look after their children or have lingering fears about contracting COVID-19.
Lack of child care has been a “significant issue,” Stettner says, especially with some child care centers that were shuttered during the pandemic still not fully reopened. That problem may ease in the fall, he and other economists say, when in-person classes are expected to resume across the country.
Meanwhile, COVID-19 was the primary reason some put off looking for a job according to a report from the jobs site Indeed. Indeed’s data found many who were hesitant wanted not only themselves but their relatives, colleagues and customers to be vaccinated before they ventured back into the workplace.
Others are looking for work but can’t find a job.
Pamela Cooney, who worked at a grocery delivery company, has not been able to find work since being laid off in the spring of 2020. She remains worried about her job prospects in the gig economy as a coronavirus variant spreads.
Cooney, 35, who lives in Riverhead, New York, is receiving more than $400 per week in unemployment benefits after taxes but expects her benefits to drop below $200 per week once the federal bonus ends in September.
The additional benefits helped her catch up on car insurance payments. Still, she and her husband put off buying their dream home in Florida after half their savings were wiped out.
“It’s hard to even put any money away for an emergency fund when you’re struggling and not making a decent living,” Cooney says. “We’re just trying to survive.”
Antoine, who worked as a corporate travel agent for more than 30 years, says that many agencies now want agents to find their own clients and work on commission rather than for a salary.
“I’ve gone from building bricks to actually having to find the straw to build the bricks,” she says of how those changes would affect her work and pay.
Antoine also believes she’s experienced ageism when applying for jobs.
“They did not even consider me,” she says of one company she applied to. “I am qualified for the position but ... I’m fighting (against) people a lot younger than myself.”
Some workers have more leverage
Still, workers have gained leverage as many employers struggle to fill positions, enabling some to hold out for jobs that offer better perks and pay.
Job openings climbed to a record high in May according to the Job Openings and Labor Turnover Survey, or JOLTS.
Openings edged up by 16,000 to a new high of 9.21 million as employers continued to bring back new workers. But hires fell for the first time since the beginning of the year amid constraints in the labor supply.
There is currently one unemployed individual per job opening, according to Lydia Boussour, the lead U.S. economist at Oxford Economics. Many industries, however, have far less than one unemployed worker available for each slot, including educational and health services, professional and business services and the hard-hit leisure and hospitality sector, she says.
And the number of unemployed
Americans who quit or voluntarily left their previous position and started looking for a new job in June rose by 164,000 to 942,000, according to the Bureau of Labor Statistics.
That increase “conforms with the notion that people are quitting their jobs and looking for something better as we enter a post-pandemic age,” says Stettner..
To woo workers, some employers are increasing pay. Average hourly earnings ticked up 0.3% in June as compared with the previous month and were 3.6% higher than they were a year ago.
Those pay boosts were concentrated in such industries as hospitality and manufacturing that have had the hardest time filling positions.
“When there’s a quick ramping up of the (economy), there’s a quick demand for workers and that means the people who pay more are going to get those workers ... just as when there’s a labor surplus they’re able to pay less and still get a competent workforce,’’ says Carl Van Horn, founding director of the Heldrich Center for Workforce Development at Rutgers University.
Go back to work, get a bonus
Several states are also offering onetime bonuses to those receiving jobless benefits who go back to work. Oklahoma, New Hampshire, Montana and Arizona are ending the federal unemployment supplement early.
Oklahoma, for instance, which cut off the federal $300 benefit on June 26, said it would give $1,200 each to the first 20,000 people who get a job.
Meanwhile, Arizona will pay $2,000 to those who take a full-time position and $1,000 to those who go back to work part time. To qualify for the one-time payments, given “on a first-come, firstserve basis,” former unemployment benefits recipients will have to be on the job for at least 10 weeks and earn $25 per hour or less.
“In Arizona, we’re going to use federal money to encourage people to work…instead of paying people not to work,” Ducey said in the statement announcing the bonus and the end to federal financial assistance.
Connecticut and Colorado are also offering one-time cash payments to some who go back to work.
But the bonuses and pay raises are not expected to last.
“In coming months as schools reopen, virus fear recedes and supplemental benefits expire, buoyant labor demand should be matched by increasingly stronger labor supply as individuals gradually reenter the workforce,” Boussour of Oxford Economics said.
Workers should be given the leeway to find the job that makes the most sense for them, Stettner says.
“We lost 20 million jobs in a very short period of time and everyone knows finding a job takes time,” Stettner says “We ought to give people that time to find their place in a new reality.”