A sign of help is published at a taco stand in Solana Beach, California, on July 17, 2017. The expiration of federal unemployment benefits on September 4 brings hope for an increase in applicants of employment to fill vacancies. (Mike Blake, Reuters)
DETROIT – Joe Perkins, head of Michigan car supplier Mobex Global, has marked Labor Day this weekend as more than a holiday or a symbolic gesture to U.S. workers.
It is now important in the real world, as the expiration of federal unemployment benefits on September 4 causes an increase in job seekers to fill vacancies that have kept their company 10% lower than their hiring targets despite pay rises and other incentives.
“We’ve tried everything. We’ve tried to adjust wages. We’ve tried to transport people from remote places … We’re out of initiatives,” Perkins said, adding that he still needs to add about 100 employees to the current workforce. of about 1,000. “I hope the reduction in (unemployment insurance) will have a major impact on labor availability. That’s what we’re really betting on.”
Although, if the behavior of the U.S. economy in 2021 is helpful to Perkins, it may be disappointing as companies ’hiring needs compete with an increase in coronavirus infections.
The gap between job offers and hiring rates, with as many open positions as there are unemployed people, has been one of the many enigmas posed by the American recovery that proceeded faster than expected on some fronts. , but which still lags behind in terms of employment. As of July, some 5.7 million jobs were still missing before the pandemic and an additional 3 million unemployed.
From top economic policy makers to heads of human resources to small business owners with “wanted help” posters posted in storefronts, the national expiration of federal unemployment benefits is expected to be Saturday as the day make clear the true state of the U.S. labor market, cleansed of any influence that weekly unemployment payments have had on people’s decisions about work.
However, the emerging consensus among economists is that the availability of benefits has been less important than a number of other pandemic concerns, such as the risks of COVID-19 itself and the scarce and costly care of children.
Is there a “thaw” underway?
About half of U.S. states decided to end federal benefit during June or July, arguing that it prevented people from returning to work. There has been little evidence that it has emerged from an increase in employment growth, although several studies have concluded that there has been a reshuffle of the labor market.
For example, unemployed people in states who ended benefits early were a little more likely to find work during the summer. At the same time, those states were less successful in attracting people from the margins of the labor market to employment or job search.
This could mean the labor “supply shock”, the element of human capital shortage that has confused global economic reopening, continues longer than expected and the loss of profits becomes a net drag on the growth. President Joe Biden told states they could use other federal money to expand benefits, but no one has yet announced plans to do so.
“We don’t expect the end of emergency (unemployment) benefits to lead to an immediate jump in employment and, in the short term, will weigh more on personal income and spending,” wrote Nancy Vanden Houten, an American economist of Oxford Economics.
At the peak of May 2020, the unemployment program drew an additional $ 600 a week to 25 million people, a $ 15 billion weekly infusion that kept household income intact amid the biggest jump in unemployment of the United States and that allowed people to buy food, pay rent and mortgages, and even waste new cars and appliances.
It dropped to $ 300 a week and the number of recipients drops to about 9.2 million.
Efforts to unravel the influence of this money on labor market options have generally concluded that other factors (e.g., fear of the virus or lack of available child care services) have been more important.
Still, companies hold out hope that the huge shortage of workers by 2021 will be reduced soon.
David Reilly, president of plastic products maker United Solutions, said monthly job applications at his company’s Sardes, Mississippi plant doubled more than 40 to 90 between May, before the state would help pay federal and August unemployment payments.
He said he had already detected a “thaw” at his other location in Leominster, Massachusetts, with the recovery of applications.
“It’s a continuous cycle” of hiring and recruiting, Reilly said, and one that he now hopes will allow him to move forward to a curve that has left him with about 50 workers in the absence of each of his plants.