COVID unemployment benefits are about to end in California. Will there be a rush for jobs?
When an estimated 2 million Californians lose their unemployment benefits next week, concerns about health and child care are likely to keep many away from the job market.
That’s the finding of experts around the country, who have identified a pattern in the roughly two dozen states that cut off some or all of the extra unemployment benefits the federal government funded during the coronavirus pandemic.
In most of those states, unemployment rates dropped slightly. People seek work where attractive jobs are available or where they badly need a lifeline.
But the loss of benefits is not a big motivating factor in pushing people to pursue jobs.
“The argument that the higher benefits were a primary reason people weren’t seeking work was overstated,” said Ray Perryman, who runs an economic consulting firm in Texas, which cut off the federal benefits in June.
After this week, four federally funded programs aimed at easing the economic sting of the COVID-19 pandemic will end in California and nationwide. The most popular is the Pandemic Unemployment Assistance program, an innovative effort to provide jobless aid to people such as gig workers and contractors who normally do not qualify government help.
So will Pandemic Emergency Unemployment Compensation, which provides extended payments to people who have exhausted their regular benefits, and an $100 additional benefit available to people who have earned both regular pay through an employer as well as a minimum of $5,000 in self-employment income.
Also gone will be the extra $300 per week that unemployed Americans are getting. That means California’s maximum weekly unemployment benefit will drop back to $450. The additional benefit was created in December when former President Donald Trump signed a COVID-relief bill into law.
More unemployment?
Other states, almost all with Republican governors, began cutting off the federal programs in June. They cited a recovering economy and often suggested the benefits discouraged people from seeking jobs.
But studies have repeatedly found that the benefits have not been much of a factor in determining whether people look for work.
There are several reasons that the cutoff is not expected to spark a deluge of job applications:
▪ Health concerns. “What we hear from workers is that it’s not the lack of job openings. It’s fear of health and safety concerns,” said Jenna Gerry, Berkeley-based senior staff attorney for the National Employment Law Project.
Recent studies have found that the benefits have not been much of a factor in determining whether people look for work.
“The preponderance of evidence we have suggests that other factors are more important in people’s decision to return to work, such as the health risk posed by the virus and a lack of child care access,” said Daniel Sullivan, Labor Markets Research Lead at the JPMorgan Chase Institute.
“Evidence as of May 2021 suggests that unemployment insurance supplements had an impact on job-finding of unemployed workers, but it was small,” a JPMorgan study found.
And a study by San Francisco Federal Reserve economists noted that one way to “think about” the impact of the $300 supplement is that “each month in early 2021, about seven out of 28 unemployed individuals receive job offers that they would normally accept, but one of the seven decides to decline the offer due to the availability of the extra $300 per week in unemployment insurance payments.”
▪ Child care. Child care and the health of the family are a huge concern for potential employees, said Amanda Blackwood, president and CEO of the Sacramento Metropolitan Chamber of Commerce.
One big question for parents: “Am I going to bring something home to my child?” she asked.
Congress is seriously considering help for child care as part of President Biden’s budget package. But that plan is unlikely to be adopted before late fall.
▪ Savings. People saved far more than usual during the pandemic. As a result, “They may not need to go back to work immediately. They can be more choosy about what job they want to take,” said Joseph Von Nessen, research economist at the University of South Carolina, a state that cut off the benefits this summer.
The rates hovered around 6 to 7% in much of the last decade, then jumped dramatically last year. The rate was 19.3% in June 2020, dropping to 9.6% this July the latest figure available.
After the benefits end
In South Carolina, there’s no one easy explanation as to what happened to the people who lost benefits.
Gov. Henry McMaster, a Republican, withdrew the state from federally funded unemployment programs as of the end of June. The state’s unemployment rate in June was already well below the national average of 5.4% at 4.5%. In July, it dropped to 4.3%.
About half the jobs created in the last month were in the leisure and hospitality industry, a sector that generally pays among the lowest wages in the state. This strong employment growth may be one indication that the early end of the federal programs had some effect on boosting employment, said Von Nessen.
While ending the benefits had an impact on improving the job market, there were other contributing factors as well. Some child care services reopened. Students became available for hotel, retail and other work.
“It’s likely that ending the benefits had some effect, but it’s difficult to quantify exactly how much,” Von Nessen said.
In Texas, Gov. Greg Abbott, a Republican, ended the federal benefits in June.
The state’s June unemployment rate was 6.2% and went up to 6.5% in July. Both figures were above the national average.
“Federally funded unemployment benefits were a lifeline to many individuals and families, and cutting them off clearly caused increased financial stress for many Texans,” said Perryman.
He saw no evidence of a major shift in the job market in the state.
“In Texas, the state employment changes month-to month have generally tracked national patterns. In fact, the biggest month of job growth in 2021 to date came a couple of months before the aid was eliminated,” he said.
This story was originally published September 2, 2021 at 5:25 AM.
.jpg)