End of US pandemic benefits fails to entice people back to work

Economists and businesses expected a wave of interest in jobs when the financial lifeline was cut, but companies continue to struggle to fill positions

A banner inviting people to apply for jobs-outside a McDonald's in Bloomington, Indiana. Reuters

Emergency unemployment benefits in the US expired two weeks ago, but employers who expected an increase in job applications are still largely waiting for them to roll in.

Federal programmes that offered an extra $300 a week for jobless Americans, provided extended benefits for the long-term unemployed and gave special aid for the self-employed expired on September 6. Economists and companies expected a wave of interest from workers as the financial lifeline was pulled away, hoping it would provide the incentive to get back into the workplace.

That has not happened, according to employers across industries.

“People who have been on the sidelines have, by and large, stayed on the sidelines,” said Richard Wahlquist, president of the American Staffing Association, the country’s largest recruitment industry group. “Nothing has changed in regard to the benefits that have fallen off and the need for people continues to grow.”

Even Mr Wahlquist is struggling. He’s looking for ten temporary workers to help at the organisation’s conference in Denver at the end of the month, paying as much as $25 an hour. So far, he could only rustle up two.

Across the country, staffing firms and businesses have yet to see a marked increase in the number of employees. Economists at Goldman Sachs forecast that the expiration of the federal programme this month, which affected about half of US states after the rest ended benefits early, would add 1.3 million people to payrolls by the end of the year. Other analysts said an end to the federal programme should increase labour supply.

Jobless claims for the week that ended on September 11 showed an increase in people seeking benefits, though the effects of Hurricane Ida affected the data. In the meantime, the great labour shortage isn’t letting up, with a record 10.9 million job openings in July.

“We’re only going to see the impact of the federal UI [Unemployment Insurance] benefits ending a couple of months from now – I don’t think we’re going to see a big spike one way or another really,” said AnnElizabeth Konkel, an economist at Indeed. “We thought things should be better by Labour Day and they’re not.”

People who have been on the sidelines have, by and large, stayed on the sidelines

Richard Wahlquist,
president of the American Staffing Association

One reason could be pent-up savings, according to Daniel Zhao, senior economist at Glassdoor. Stimulus checks, boosted unemployment benefits and expanded social safety nets drove the savings rate to a record 34 per cent last year and it remained elevated at 9.6 per cent in July.

Joanie Bily, chief workforce analyst at Atlanta-based EmployBridge, was one of the people who thought that her company would see a “significant increase” in the number of online applications once boosted benefits ended.

“I’ve been asking all of our locations across the US: ‘Are you busier? How does it feel since the benefits have ended?’” said Ms Bily, whose firm connects employees with companies across the US with a focus on manufacturing, logistics and call centres. “I pulled the data last night and I thought it would be better, but it’s not.”

Applications increased by about 10 per cent in the two dozen states that ended emergency benefits early – but that was also a boost that lasted only a few weeks, she said.

In the company’s offices in California, the most populous state with recently ended benefits, managers told her there is a slight boost in inquiries for administrative work but “it’s too soon to tell”.

In the restaurant industry, job applications have declined by about 3 per cent to 4 per cent each week for the past nine weeks, including the period following the expiry of boosted benefits, according to Restaurant365, a restaurant-management software company.

That’s “contrary to many predictions that aid was the primary factor keeping restaurant workers out of the workforce”, said Tony Smith, chief executive and co-founder of Restaurant365.

The reasons for the missing workers are many: childcare barriers, a skills mismatch, health concerns – particularly for service-industry jobs – and a mass reallocation of work as people reconsider careers.