The recent expiration of federal unemployment benefits likely won’t ease the hiring crunch. It could make it worse. In the past few months, many business owners have grown to begrudge federal pandemic unemployment assistance, which they viewed as providing a disincentive for people to work and thus contributing to a dearth of would-be workers.
With the expiration of that benefit on September 4, 2021, business owners may like what happens next even less. While the jury is still out on the effect of this latest lapse in enhanced unemployment benefits, which clocked in at $300 a week, above what states pay out, history shows that there is a tradeoff.
When unemployment benefits are cut, in general, there is a slight increase in people looking for work, says Ben Zipperer, in economist for the Economic Policy Institute, a Washington D.C.-based think tank, but that number tends to be small. The largest result by far, he says, has been a massive decrease in spending among those who’ve lost benefits, which also cuts into a company’s bottom line, making it potentially harder to justify bringing on new hires.
It may also cut into the funds businesses can pay for certain positions, which doesn’t inspire people to get back into the workforce, especially during a pandemic when people more aware of the costs of working at a particular job relative to all the other things that matter in their lives.
“Many low-wage employers are having trouble finding workers to work at [modest] because those jobs are much more dangerous now, and the working conditions are much worse than before the pandemic,” says Zipperer.
In April of last year, the government kicked off its federal assistance program for unemployed Americans, providing as many as 7.5 million access to an extra $600 per week, an amount that was later reduced to $300 per week under the Biden Administration. Unemployment benefits were also offered to contract workers and the self-employed, who under normal circumstances do not qualify for assistance. Payments were extended beyond the traditional 26 weeks offered by most states.
While there are currently no immediate plans in Congress to reauthorize this relief, typical state unemployment benefits will continue, thanks in part to the $350 billion in federal assistance provided to the states under the American Rescue Plan. Since the onset of the coronavirus pandemic, the federal government has delivered more than $800 billion in unemployment benefits.
If you’re looking for workers, Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce, recommends staying local before all else, and putting the word out as much as possible that you’re hiring. For instance, he notes that a restaurant owner he’s been in contact with found employees by telling customers about job openings directly.