Calls to end pandemic unemployment benefits gain steam after disappointing jobs report
Calls for the pandemic-era unemployment benefit to be cut heightened this week as worries about a labor shortage grew and culminated in a crescendo on Friday following a hugely disappointing April job report.
South Carolina and Montana announced plans to end their unemployment programs in late July ahead of the report after week-long local reports across the country reported restaurants were unable to fill.
Following Friday's employment report, the U.S. Chamber of Commerce announced its support to end the additional $ 300 in weekly unemployment benefits citing labor shortages while Senator Roger Marshall (R-KS) tabled a bill to lift pandemic unemployment programs.
"While there are certainly people in need of access to more unemployment benefits at the heart of this pandemic, it shouldn't be our job to create a lucrative reliance on the government that makes it more beneficial to stay unemployed than to return to work," said Marshall made a statement on Friday.
A man wearing a mask walks past a sign that reads "Hire Now" on Melrose Avenue along the coronavirus pandemic on April 22, 2021 in Los Angeles, California. (Photo by Alexi Rosenfeld / Getty Images)
However, there is disagreement among economists as to what is responsible for the daunting work performance in April. After missing more than 700,000 wage increases last month - 266,000 new jobs were created, up from an estimate of 1 million - a firestorm erupted on Twitter among economists and analysts who broadly agreed that there are labor shortages themselves but argued about the culprit.
To make matters worse, job restoration does not take place in a vacuum, but rather in the midst of a public health crisis that introduces multiple variables.
"A real sign of a tightening of the labor market or even of shortages"
According to Heidi Shierholz, Senior Economist and Director of Policy at Economic, while there is no single measure of labor shortage, increased hours and wages are seen as signs that employers are having difficulty filling jobs and that the labor market is changing tightened Policy Institute. Both occurred in April.
The average weekly working time for leisure time workers in the hospitality industry increased significantly in April, reaching 26.7 hours, according to the Ministry of Labor, compared to 25.8 hours prior to the February 2020 pandemic.
"When employers really can't find the workers they need, they increase workers' hours," Shierholz told Yahoo Money.
The average hourly wage for labor and hospitality workers also rose to $ 17.88 in April, after a pandemic low of $ 16.92 in July, and is above the pre-pandemic level of $ 16.90, according to the Department of Labor February 2020.
Some economists pointed to the rise as a sign that employers are competing with the increased unemployment benefits, particularly the extra $ 300 a week the Chamber of Commerce said: "About one in four recipients takes home more unemployment than they deserve . "
Shierholz noted that wage increases in some sectors may not be robust enough. For example, non-regulatory recreational and hospitality workers still make less than $ 21,000 a year after wage increases, or about $ 10 an hour, according to Shierholz.
"While there are definitely signs of isolated and temporary bottlenecks in the labor market," Shierholz said, "many of the big complaints we see relate to companies becoming frustrated that they cannot find workers with extremely low wages."
"Completely among men"
A customer walks past a sign in Larkspur, Calif. On April 2, 2021 that is now being displayed in a BevMo store. (Photo by Justin Sullivan / Getty Images)
To make matters worse, the pandemic itself disrupted American life in ways that differ from a typical downturn. Factors such as distance learning and limited childcare options affect the economy, especially women workers. This is borne out by the details of the April job report.
"In April there was a sharp rise in the labor force, [but] it was all male," Shierholz said. "That doesn't scream that this is an unemployment benefit issue, it really screams that in the time of COVID there is something like caring responsibility."
The number of women in the workforce decreased by 64,000 in April while the number of men increased by 493,000, American Progress economist Michael Madowitz told Yahoo Money.
"When there is a labor shortage, everything revolves around women," Madowitz tweeted on Friday after the job report.
Where the attitude fell provides another clue. Leisure and hospitality actually created 331,000 jobs in April, but manufacturing payrolls fell 18,000, especially 27,000, which could be due to national chip shortages.
In addition, fears about the public health situation could hold some workers back, Shierholz said. Covid vaccines weren't available to all adults until April in 33 states - the others didn't open until mid to late March - meaning those who received the Pfizer or Moderna vaccines had to wait five to six weeks before they have been fully vaccinated.
"We have to have a sensible exit"
Several newspapers found that the $ 600 additional benefits previously given out as part of the pandemic had a limited labor supply impact and were unlikely to affect labor, including one from the National Bureau of Economic Research and one from from Yale University. The NBER study researcher found that his original results were from January to the end of March, when workers were again given additional unemployment benefits.
"Today's job report resulted in most people just telling their bosses about [unemployment insurance], and we learned very little," Arindrajit Dube tweeted on Friday. "By the end of March, changes in [unemployment insurance] replacement rates in individual countries due to the Jan boost had little impact on jobs."
More clarity on what is holding back workers could come with next month's job report. By then, around 16.5 million workers will still need unemployment benefits, which will run through September 5, while the economy has 8.2 million fewer jobs than before the pandemic.
"We have to have a reasonable phase out of these things because even though the economy is improving, we will still have a lot of unemployed at this point," said Shierholz. "More importantly, we don't have enough vacancies for all the unemployed."
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
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