WASHINGTON ― One of the biggest economic arguments this year was over whether extra unemployment benefits made it impossible for employers to hire.
Republican governors cut the federal compensation early, and Democrats made no effort to keep the benefits in place, even though they didn’t agree that the money hurt hiring.
But the past several months have strongly suggested that the extra jobless pay wasn’t holding back hiring after all. The federal benefits fully expired early in September — and instead of surging, job growth slowed dramatically that month.
Meanwhile, there remain an unprecedented 10 million job openings, and some businesses still complain they can’t find workers. What’s going on?
The likeliest explanation is that there is still a pandemic.
Susan Peterson of Fort Lauderdale, Florida, has worked as an adjunct college professor most of her adult life, but in recent years had been working as a substitute teacher. She hasn’t set foot in a classroom since March 13, 2020, when the pandemic shut everything down.
Peterson, 79, said she accepted a position teaching English as a second language at a technical college in July, but wound up deferring her September start date on the advice of a doctor who said she should stay out of schools until the delta variant isn’t spreading as much.
Peterson needs the money. She spent much of her career in teaching jobs that didn’t make Social Security payroll contributions, so her retirement benefit is less than $300 per month. Her state unemployment benefit paid only $89 per week after Florida discontinued the extra $300 that had been provided by the federal government.
It’s just not worth getting sick.
“I like to work,” she said. “I love my students, but I feel like I should wait till spring. Maybe things will change.”
More than 3 million people avoided work out of fear of catching COVID-19 in September, roughly the same number who avoided work for that reason back in June, before the delta variant had taken off. But 4 million said they were sick with the disease or caring for someone who was, up from 1.7 million in June, according to an analysis of federal survey data by Mark Zandi, chief economist at Moody’s Analytics.
“There is a long list of reasons why it has been difficult for businesses to fill the record number of open positions, and while the extra unemployment insurance benefits is on the list, it is towards the bottom,” Zandi said in an email. “Sick workers and fear of getting sick are at the top of the list.”
Even as job openings declined slightly from their summer peak, more people voluntarily quit. That shift has lined up with the surge in the delta variant, as Elise Gould, an economist with the left-leaning Economic Policy Institute, has pointed out.
For more than a year, Republicans have decried the federal unemployment benefits as employment killers. Those benefits were first approved by both Republicans and Democrats under former President Donald Trump at $600 per week, and then again at $300 per week, in 2020.
Republicans escalated their complaints once President Joe Biden was in office, claiming that Democrats were paying people not to work and causing a widespread labor shortage. Democrats extended the $300 per week federal unemployment benefit, paid out on top of state unemployment benefits, through the beginning of September in the American Rescue Plan, the multitrillion COVID-19 relief bill passed in March.
“We shouldn’t have policies in place that disincentivize people from returning to the workforce,” Sen. Rick Scott (R-Fla.) said at the time.
That sentiment was echoed by Republicans all summer.
Their claims were backed anecdotally by restaurant and hospitality-sector business owners who were finding it difficult to hire workers, even as businesses began to open up. Republican governors across the country cut federal unemployment benefits short over the summer, refusing to use the funds approved by Congress and arguing that the cutoff would push people back to work and put an end to the labor shortage.
But the states that cut benefits didn’t see stronger job gains than the states that didn’t. And now that the benefits have fully expired, the latest data from the U.S. Labor Department showed weaker hiring and little change in the labor participation rate.
Republicans still say the extra benefits are to blame for the ongoing hiring woes.
“We’ve given people so much money they’re not working,” Scott told HuffPost on Tuesday. “I mean, look at how much money people put away because they got so much extra money.”
Scott added that other benefits, such as the expanded child tax credit, are also keeping Americans home. The credit pays parents as much as $300 a month per child through the end of this year, and Democrats are hoping to extend the policy indefinitely.
“There’s so much money washing around out there, it’s hard to get people back at work,” Sen. Lindsey Graham (R-S.C.), another vocal unemployment critic, told HuffPost. But he expects the employment numbers to get better now that people have been cut off.
Federal data do show that middle-income households have more savings than usual, which Zandi said is likely a result of unemployment benefits and the three rounds of stimulus checks Congress approved since last year. Most households will probably burn through that money within months.
Peterson, for her part, had to apply for a grant to get her roof fixed this year. It’s not a pile of savings that’s kept her from working these past few months.
“I have less than $300 in my bank account,” she said.