Cutting Emergency Unemployment Early Didn't Fill All The Sh*tty Jobs? Well Imagine That!
A new study found that 20 Republican-led states that ended emergency unemployment benefits didn't see a huge hiring boom, but that there were some changes in the demographics of who went looking for low-wage jobs in those states, the Washington Post reports today. So wait, they're saying that by cutting unemployment benefits while the country is still emerging from an unprecedented recession caused by a global pandemic, you might not see people rushing back to workplaces where the spread of that pandemic remains a major risk?
Who'd 'a thunk it! Here's the Post's overview:
A new analysis by payroll processor Gusto, conducted for The Washington Post, found that small restaurants and hospitality businesses in states such as Missouri, which ended the extra unemployment benefits early, saw a jump in hiring of workers over age 25. The uptick in hiring of older workers was roughly offset by the slower hiring of teens in these states. In contrast, restaurants and hospitality businesses in states such as Kansas, where the full benefits remain, have been hiring a lot more teenagers who are less experienced and less likely to qualify for unemployment aid.
The findings suggest hiring is likely to remain difficult for some time, especially in the lower-paying hospitality sector. The analysis also adds perspective to the teen hiring boom, revealing that more generous unemployment payments played a role in keeping more experienced workers on the sidelines, forcing employers to turn to younger workers. It indicates teen hiring could slow further in September, as unemployment benefits are reduced across the country and young people return to school.
The Gusto study can be parsed to support both major views on the difficulties employers are having in finding low-wage workers. 1) Your goddamned liberal labor supporters argue that with so many jobs opening up all at once, a lot of job-seekers are looking for better jobs than they had before the pandemic, so if retailers and restaurants want to get workers, they'll need to raise wages. 2) Your free-market entrepreneurial types argue that emergency unemployment makes workers lazy, and that the real secret to getting them back to work is to slash benefits so people will get off their asses and look for jobs.
Now, if you're in the "make people desperate enough and they'll take anything they can get" camp, the shift from mostly teenaged applicants to mostly applicants over 25 might make you grin a wide grin, because look at those over-25 worms crawling back to the workforce with their tails between their legs. So much for your "bargaining power"!
But here's the thing: Overall employment didn't change a hell of a lot in states that terminated benefits, according to the Gusto analysis and other sources.
So far, early data suggests that cutting the benefits given to Americans who lost their jobs during the covid-19 pandemic has not led to a big pickup in hiring. The 20 states that reduced benefits in June had the same pace of hiring as the mostly Democrat-led states that kept the extra $300-a-week unemployment payments in place, according to state-level data from the Labor Department. Survey data from the Census Bureau and Gusto's small-business payroll data show similar results.
Many economists and business owners say other issues such as health concerns, child-care problems and workers reassessing their career choices appear to be larger factors keeping them home.
"If what we want is a speedy economic recovery, ending unemployment insurance is not the silver bullet," Gusto economist Luke Pardue said. But, he added, "unemployment insurance was at least partially a cause of the boom in teen employment."
Teenagers tend not to have worked long enough to qualify for unemployment, so they've been going after the openings at the lowest end of the wage scale, and employers have been changing the minimum age for many jobs to 16 years old. That tends to remain the case in states that still have the federal emergency unemployment benefits, which are set to expire altogether September 6, unless Congress renews them.
Before any capitalists wearing big top hats and spats get too chuffed about this triumph over workers, we should note that workers who can find better-paying work are still searching for it, while families who've had their benefits cut are suffering — but not finding that many jobs.
Economist Arindrajit Dube of the University of Massachusetts at Amherst found that a lot more people reported having a hard time paying their bills in states where unemployment benefits were slashed in June. He analyzed Census Bureau survey data and found a roughly 60 percent drop in the number of people on unemployment in the states that ended the extra $300 and the aid for self-employed and gig workers in June, but no increase in employment.
"There is evidence that the reduced UI benefits increased self-reported hardship in paying for regular expenses," Dube wrote, adding, "Of course, this evidence is still early."
But surely those over-25 layabouts and slackers who've been driven back to looking for work will be a boon for employers of low-skill, low-wage workers? Maybe, maybe not. Resource One is an outfit that recruits hospitality workers in both Missouri, which ended the emergency benefits, and Kansas, which still has them for now; it says that it's filling more positions for cooks, bartenders, and waitstaff in Missouri, while in Kansas, people are submitting applications but not yet ready to take those jobs just yet, according to CEO Ken Meeks. Clearly, those lazies in Kansas still think they have options!
Meeks also observed that restaurant wages on the Missouri side have started dropping:
Jobs that were paying $18 an hour now pay $15, but "employees are taking it because they've lost leverage on the Missouri side," Meeks said.
If you can create enough hardship, people will take what they can get. It's the American dream! In a non-insane country, maybe the way to fill positions would be to pay people a living wage, not to ensure there's always a workforce that's on the edge of poverty.
Again, remember, the overall hiring numbers aren't very different in the two states — red states that chopped emergency unemployment are just shifting the applicant pool from teenagers to young adults who are running out of options.
But surely that means people who'd been willing to do shitty jobs are surging back, right? Not necessarily: While it's just one anecdote, the WaPo story notes that a Missouri restaurant that's had a manager position open for six months still hasn't filled it. Restaurateur Jerry Rauschelbauch has seen a whole lot of applications — just not from people who could be expected to manage a restaurant:
In the two weeks after the unemployment money scaled back in Missouri, Rauschelbach said he was flooded with applications for the manager position, but few had worked in the industry before.
"The type of employee applying is not what I'm used to," Rauschelbach said. "The people applying are grasping for any job. I'm looking for somebody who is committed to the industry. It's a hard life."
The job pays $50,000 annually, which is a bit higher than average restaurant manager pay in Missouri, but just below the average for a "general manager" in the state (both figures according to Indeed).
It might just be possible that a lot of people with managerial experience left the restaurant business for better jobs! Rauschelback does appear to have almost gotten the point:
He still thinks the generous unemployment benefits hurt hiring, but his recent experience has also caused him to realize a lot of Americans are reassessing their careers and no longer want to work 3 p.m. to 11 p.m. on Saturdays and Sundays.
Now, all Missouri has to do is find a way to cut managerial salaries so people will be more willing to take shitty jobs again, some more.
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