Surprise! Cutting Off Unemployment Still Doesn't Magically Produce Jobseekers

Probably anyone who has been on unemployment could have told them that.

People love the idea of "common sense." The idea that there are certain truths we can hold to be self-evident about "the way things are" or "the way people are" or what the result of certain actions will be. For some things, this works quite well. It is common sense not to stick your hand on a hot stove, because you will be burned. For others, it doesn't work as well. For instance, people insist wrap dresses are universally flattering, but I look terrible in a wrap dress. Diane Von Furstenberg is not my friend and I have accepted this.

One piece of common sense that people were especially in love with this year was that, obviously, the reason there was a labor shortage and businesses that do not pay people enough to live on were having a hard time finding employees was because the people who "should" have been working those jobs were living high on the unemployment hog, making more on unemployment than they would at those jobs. I'd like to say it was just Republicans saying this, but not always. This is something very deeply ingrained in American thought.

But guess what? Yet another study, this one published on Friday by the US Bureau of Labor Statistics, has shown that cutting off enhanced unemployment benefits did not lead to a sudden surge of jobseekers. In fact, over the course of three months, the states that cut those benefits off early fared pretty much exactly the same as states that did not.

Via PBS Newshour:  

In states that cut off the $300 check, the workforce — the number of people who either have a job or are looking for one — has risen no more than it has in the states that maintained the payment. That federal aid, along with two jobless aid programs that served gig workers and the long-term unemployed, ended nationally Sept. 6. Yet America's overall workforce actually shrank that month.

"Policymakers were pinning too many hopes on ending unemployment insurance as a labor market boost," said Fiona Greig, managing director of the JPMorgan Chase Institute, which used JPMorgan bank account data to study the issue. "The work disincentive effects were clearly small."

In fact, some states that cut off benefits now have fewer people working than when they did have those benefits.

In Wyoming, fewer people are in the workforce now than when the state cut off all emergency jobless aid. Fear of contracting COVID-19 likely discouraged some people from seeking jobs, Wenlin Liu, chief economist at the state Economic Analysis Division, said last week.

Wyoming has one of the lowest vaccination rates in the country, he noted, and has been a COVID-19 hotspot since late summer. The surge in infections, Liu said, may be causing some parents to keep their children home.

So weird that people aren't willing to die in order to go to a job that doesn't pay them enough to live on.

Clearly, the "common sense" here was wrong. The enhanced unemployment benefits are over and there's a massive surge of people quitting their jobs anyway. 

There are many factors here, but one is that a lot of people who were working crappy paying jobs before the pandemic were stuck in them. Not because they couldn't do better, but because it is so difficult to get another job while working the kind job where you don't get your schedule until maybe a day before the week starts. It's impossible to schedule an interview. Not being able to go to those jobs allowed them to actually pursue other careers.

I think a lot of what is happening is that we are all kind of waking up from the number the Great Recession did on us. Jobs were scarce during those years and so employers got to keep wages down and then kept them down long after the economy started to recover. We were all still in the mindset of "Oh god, we're all replaceable, best to just be glad we have any job we can get." Employers thought this was the new normal and that things were going to remain that way forever. Turns out they were wrong. About a lot of things.

Anyway! Stephen will be talking about this and more later on the livestream, at 3: 30 EST, but for now you may open thread.

[ PBS ]

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