Will job seekers return in droves soon?

Will job seekers return in droves soon?

Federal Unemployment payments of an additional $300/week of unemployment compensation are set to expire the week of September 6. Currently there is no expectation that this federally-funded benefit will be extended. There is speculation that this benefit resulted in a significant number of potential job applicants choosing to stay on unemployment as a more financially advantageous choice. While the additional $300/week may be enough to make unemployment payments competitive with a paycheck, saving the cost of commuting, lunches, business attire and, of course, daycare, the argument may have merit.With the benefit set to expire, will that be enough to “force” those collecting enhanced unemployment insurance back to work? One way to answer that question is to examine the data of the two dozen states that elected to end this benefit prior to September 6, some as early June 12. The results are surprising.

As reported by CNBC on July 22, “Census Bureau data suggests recipients didn’t rush to find jobs in the weeks following the first batch of state withdrawals, according to Arindrajit Dube, an economics professor at the University of Massachusetts Amherst.” For the states that cut benefits in June, benefits fell by 2.2% translating to a 60% reduction in unemployment rolls. However, the report continues in noting that for those states “the share of adults with a job fell by 1.4 percentage points over the same period, according to Dube. (Employment rose by 0.2 percentage points in states that didn’t end the pandemic benefits.)”

The conclusion is that, so far, there does not appear to be a correlation in increase in job seekers with loss of this benefit. There may be other factors that slowed an uptick in applicants, such as concerns about contracting COVID-19 and perhaps an effect from wanting to stay on vacation (or even on staycation), without benefits, through the end of the summer. There may also be some uncertainty among unemployed parents of school-age children about whether schools will be re-opening in person or virtually, with or without mandatory masking, that may be impacting a segment of the workforce from committing yet to return to fulltime employment. A few more months of data will provide better insight.

If waiting out the federal unemployment benefit expiration will not be the cure-all for the labor shortage, here are some ideas on how to proactively attract applicants to suddenly hard-to-fill positions.