$600 Emergency Unemployment Reduced Job Searches — When There Were No Jobs

And now? Outlook hazy, ask again later.

As the US keeps dragging itself out of the pandemic recession, job numbers continue to improve. Yesterday's unemployment figures show that first-time unemployment claims were down again for the week ending July 10, but while it's a new low since the start of the pandemic, it was still 360,000 initial claims, plus another 96,362 applications for the special Pandemic Unemployment Assistance program. That's more than double the unemployment claims from before the pandemic, which ran around 200,000 per week.

Those emergency pandemic unemployment benefits of $300 a week will expire at the end of September for half the states, but, in response to rightwing bullshit panic that somehow the princely sum was causing Americans to just sit around on their asses, 25 states with Republican leadership ended the emergency benefits in June, even though employers who increased wages and benefits had little trouble filling jobs. Haha, as if "supply and demand" applied to employers!

Employment experts pointed to a whole lot of reasons that low-paying jobs were going unfilled (like the fact that when a lot of jobs are suddenly available, workers will chase after higher-paying jobs, plus the whole "no child care"and"I do not wish to die" reasons). But even now, you have passive-aggressive jerkwads insisting that nobody wants to work because unemployment benefits are far too generous.

The Fight For 15 campaign found this photo of a whiny tabletop sign at an El Paso restaurant; the sign is from June, shortly before Texas ended the emergency unemployment benefits:

Sadly, due to government handouts, no one wants to work anymore," the sign says. "Therefore, we are short staffed. Please be patient with the staff that did choose to come to work today and remember to tip your server. They chose to show up to serve you.

As quite a few people pointed out online, the business's owner took out over a million dollars in PPP loans to stay afloat and keep workers employed. But according to Fight for 15, server jobs at the steak house pay just $2.13 an hour, plus tips, and the benefits are limited to an employee discount on meals and some kind of "referral program."

Gosh, people are looking for other work? How tragic!

Now, we have yet to see an interview with anyone bragging about how they're turning down job offers left and right because they'd rather whoop it up on $300 a week (OK, fine, McSweeney's published a satirical piece pretending exactly that).

But we have seen new research from the National Bureau of Economic Research (NBER) suggesting that even the far higher $600 a week emergency benefit (which ran from March through July of 2020), had only a slight downward effect on job-seeking. What's more, while the benefits did lead to fewer job applications being submitted, that was ultimately a good thing, because the passage of the enhanced benefits "coincided with exceptionally large and brutal changes in the labor market."

On the whole then, since there were drastically fewer jobs to chase, it's a damn good thing people had a source of income to get them through the worst of the pandemic recession. The authors also cite other research which found that the higher unemployment payments had "a stimulus effect on consumption" that "had a positive effect on employment" — in other words, even if people weren't working (at jobs that were scarce anyway), the unemployment money allowed them to buy food and stuff, keeping others in jobs. The bottom line, the authors say, is that their research helps "explain prior findings that [pandemic unemployment compensation] did not decrease employment."

But wait! How about those states that have cut off the emergency benefits? Are they seeing a lot more employment than states where people are still just munching gold-leaf Hot Pockets and wiping their butts on the help wanted ads? (That's especially gross since those ads are now only online, but the lucky duckies no doubt just buy new "iPhones" and flush their old ones.)

The best answer to that is "Hard to say," according toThe Economist, which notes that the New York Times and the Wall Street Journal both looked at the same job stats following Missouri's cutoff of emergency benefits and came to wholly different conclusions. Ultimately, it's just too early to say, although most economists still think other factors explain the seeming "labor shortages" in some sectors.

For instance, the Economist points out, while early numbers from the first four states to drop the enhanced benefits show a drop in unemployment, economist Daniel Zhao (incidentally, one of the authors of the NBER study) noted that even before those states dropped out of the expanded benefits, their unemployment rate was dropping faster than in other states, so don't you go hawking your post ergo propter around here, buddy.

In any case, the early data are still difficult to interpret, and that's likely to be complicated even further by the fact that the pandemic is surging again, particularly in states with low vaccination rates — which are also the states that prematurely ended the pandemic unemployment benefits. As the Economist asks,

Who would choose to be a chef, when research suggests that practically no other occupation poses a higher risk of dying from covid-19? Until that threat abates, expect labour shortages to continue.

We suppose that when the federal benefit expires at the end of September, economists may also be able to do more direct comparisons of how that affects unemployment and job-seeking in sane states with high vaccination rates, too. That's assuming that the Delta variant of the virus hasn't by then mutated into a form that's unaffected by the vaccines and makes victims' lungs explode the day after infection.

[ MarketWatch / McSweeney's / Science Direct (abstract) / NBER (Full paper, PDF) / MSNBC / Economist/ Photo:  "Old White Truck," Creative Commons license 2.0 ]

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