In an early September article, Abel Personnel asked Will Job Seekers Return in Droves Soon? This question was of course referring to the federal payments of an additional $300/week of unemployment compensation that were set to expire the week of September 6. Many pundits had posited that these federal subsidies had the effect of making it more financially prudent not to work. The combination of state and federal unemployment benefits plus the cost savings from forgoing commuting, lunches, business attire and, of course, daycare, created a powerful incentive to not work.

The results? Very few unemployed suddenly sought or took positions once the subsidy ended. In its October 23 analysis, the Associated Press uncovered the following data:

  • Overall, there has been no significant influx of job seekers.
  • There was no difference in the total workforce (those who have a job plus those who are seeking a job) between those states that cut the subsidy and those that did not. America’s overall workforce actually shrank in September.
  • Higher proportion of women are leaving the workplace.
  • Record number of people are leaving for new jobs, many spurred by the prospect of higher pay elsewhere.

So why did unemployed not return to the workforce? AP found a variety of reasons:

  • Job seekers did not have the skills that local employers required.
  • Positions were unavailable that required the skills and experience those applicants had. Laid off factory workers could not easily transition to another job category.
  • Fear of exposure to COVID-19.
  • No childcare available.
  • The three stimulus checks plus the overall decrease in discretionary consumer spending created enough financial cushion to continue staying home for now.
  • Families decided that they could “get by” during this pandemic on one salary, and the loss of living standard was more than offset by the satisfaction of being home to care for family.

For those who retired early, the above were disincentives to “coming out of retirement,” plus four other pandemic-related factors:

  • The values of their homes have increased so much that the financial goal for retirement was reached earlier than expected.
  • Similarly, the continued rise in the stock market over the past 12 years has created an investment portfolio that allowed earlier retirement.
  • They would need to learn the skills now being sought, and are not willing to invest the time and expense of training for a short return to employment.
  • Available employment either pays too little and/or is too physically demanding (e.g., hospitality industry).

Dropping the subsidy was not the cure-all many had hoped. Based on the data presented, Abel Personnel’s recommendations of early September on how to attract the unemployed remain valid:

  • Support efforts to increase childcare availability.
  • Add flexibility to job conditions.
  • Support skill retraining programs.
  • Offer compensation that reflects current market conditions.
  • Consider relocating jobs to where the skills are.

Our Abel Personnel recruiters can assist you with many of these adaptations to the labor market.

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