NORFOLK, Va. (WAVY/WNCT) – Over the holiday weekend, several federal pandemic unemployment benefits came to an end. Business owners are hoping it could mean the end of their staffing struggles, but one economist isn’t holding his breath.
For much of the summer, many hiring managers pointed to the extra unemployment benefits as the reason for hiring troubles, especially in the hospitality industry. How likely is it that discontinuing the extra $300 a week in unemployment will all of a sudden fill all those vacant positions?
Bob McNab, an economist at Old Dominion University, said it’s “doubtful.”
“The real problem is people leaving the labor force. If you look where we started in the pandemic, there are less people looking for work,” McNab said. “In other words, there are just not enough unemployed people to fix the labor problems in the region.”
McNab said while some people could be forced back into work by unemployment funds drying up, there is already evidence it won’t be the end-all solution. Republican governors in some states halted the $300 federal enhancement weeks ago as businesses faced staff shortages, hoping it would make a difference.
“If we look at the states that cut expanded unemployment benefits and we compare them to the states that kept it, job growth was actually higher the last four months in the states the kept expanded unemployment benefits,” McNab said.
The same can be said in Eastern North Carolina, too.
Larry Donley, the NC Works Northeast Regional Operations director, said they are not sure this will get people back to work because, for a big reason, COVID-19 is still a big issue.
“I think there’s been a lot of people that say, Oh, it’s because of the extended benefits that there is a labor shortage. I think it does play a part or has played a part,” Donley said. “But again, I don’t think it tells the full story. I think there’s a lot of concern still from individuals about just the pandemic in general.”
Donley said he believes there are a few other reasons people aren’t getting back to work.
“I think a lot of individuals are concerned about childcare or don’t have the ability to afford childcare due to the pandemic as well,” Donley said.
Some states began cutting these benefits earlier this summer. ECU Economics Professor Dr. Philip Rothman said it didn’t necessarily help the worker shortage in those states.
“The evidence from the summer did not suggest that enough states that did cut back expansion had a larger expansion in employment growth,” Rothman said. “That doesn’t mean we won’t have larger expansion.”
While these cuts may impact local families, there is still help available.
“There’s probably going to be people taking a hit, obviously. But at the same time, I just want people to know that there are numerous resources, NC Works is one that’s here and willing and able to help assist those individuals who want to find employment,” Donley said.
For job information or to search the NCWorks website, click here.
Economists Peter McCrory and Daniel Silver of JPMorgan found “zero correlation″ between job growth and state decisions to drop the federal unemployment aid, at least so far. An economist at Columbia University, Kyle Coombs, found only minimal benefits.
With the federal benefits expiring Monday, it’s estimated that roughly 8.9 million Americans will lose all or some of these benefits.
While the White House has encouraged states to keep paying the $300 weekly benefit by using money from the stimulus bills, no states have opted to do so.
McNab said he is watching the return to in-person learning in public schools closely to see if that prompts more people to jump back into the labor pool. It is suspected many parents of younger children have stayed home since virtual learning started in March 2020 to help care for their kids.
Other workers may have taken the pandemic as an opportunity to make a career change.
McNab said he believes getting more people in the United States vaccinated is what will give people the confidence to find work again.
A disappointing August jobs report is also being blamed on the rise of the delta variant. Economists had projected about 735,000 jobs would be added to the economy in August, but only about 235,000 jobs were added, according to the U.S. Bureau of Labor Statistics.
President Joe Biden said while the number of jobs added wasn’t what the country had been aiming for, not all numbers were negative. The federal unemployment rate dropped to 5.2% and the number of people applying for unemployment benefits was down in August.
The Associated Press contributed to this report.