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MNI EXCLUSIVE: US Hiring Moderates After Jobless Benefits Fall

MNI (Washington)
WASHINGTON (MNI)

The expiration of a USD600 boost to regular jobless benefits at the end of July appears to have done little to drive unemployed Americans back to the jobs market in August, recruiters and industry experts told MNI.

The extra weekly cash authorized under the CARES Act expired July 31, reducing weekly benefits for the nearly 16 million Americans collecting unemployment through August 1. Some have argued the stepped-up benefits were holding back the recovery because it discouraged people from returning to work.

A ZipRecruiter survey in the first week of August asked respondents how a benefit decrease from USD600 to USD200 would affect them and found that unemployed workers hypothetically receiving a smaller weekly benefit were more likely to spend more time searching for work and accept "less attractive job matches," said Julia Pollak, a labor economist at online job marketplace ZipRecruiter.

"We expected to see a big surge in job seeker activity in August," Pollak said, but that didn't turn out to be the case. "We didn't see people rush out in desperation to find work when those benefits expired," she added. It's possible that many Americans likely saved a portion of their benefits to use after the expiration date or otherwise chose to rely on savings and family support for now.

The U.S. economy added nearly 1.4 million jobs in August, down from 1.7 million the month before and 4.8 million in June, according to the Bureau of Labor Statistics' latest jobs report Friday.

"The decline in assistance has not been offset yet by an increase in hiring and earnings. At some point. there's going to be some kind of reckoning," she said.

WAITING IT OUT

President Donald Trump late last month signed an executive order allowing states to offer an extra USD300 per week on top of regular state-specific benefits until funds run out, a move "that may entice some people to reenter the job market," said Yvonne Rockwell, a franchise owner at Express Employment Professionals in Santa Clarita, California.
But most job seekers in the southern California area, a Covid-19 hotspot, still aren't willing to accept just any job offer that comes their way and may opt to remain on unemployment even though their benefits have been reduced, she said.
Many are prioritizing job security over personal finances and are actively turning down temporary work while waiting out employers who may be hesitant to offer full-time opportunities during the coronavirus crisis, she said.
"The majority are still looking for long-term opportunities and they don't see the benefit of getting off of unemployment if it's just a short-term," she said. "Those that I find that are a lot more flexible to the short-term are those that have not been able to get any benefits."
By contrast, job seekers in the Chicago area, also hard-hit by Covid-19, were much more amenable to accepting temporary employment after additional benefits were cut, said Tom Gimbel, founder and CEO of the LaSalle Network, a Chicago-area staffing firm.
"People were much more willing to take jobs" once those benefits expired, he said. "We saw that across the board, especially in lower-level USD15-20 an hour jobs. People were more open to listening to those versus before when they may not have."

BENEFIT YEAR CHALLENGES

A nationalized rush to the labor market might not happen until unemployed Americans approach the end of their benefit year, said ZipRecruiter's Pollak.
Unemployed Americans are eligible to receive up to 39 weeks of state unemployment benefits under the CARES Act, up from the 26 weeks typically offered by most states. With just over 20 weeks passed since most Covid-19 layoffs began, many unemployed workers have only exhausted half of their benefits, she said.
"There's considerable evidence that people ramp up their job search close to the time when their benefits expire," she said. "I expect that around the winter, the end of December, job seekers will feel increasing financial pressure to find work."

A July working paper published by researchers from the Atlanta and Kansas City Fed banks found that the 13-week extension to unemployment benefits accounted for roughly 7% of work disincentives stemming from the enhanced policy. Another 42% came from the additional USD600 per week.

Pollak said ZipRecruiter has seen an uptick in new job seekers as temporary layoffs increasingly turn permanent, but "it's a trickle, not a wave."

MNI Washington Bureau | +1 202-371-2121 | brooke.migdon@marketnews.com
USPolicy NewsExclusiveStorySourcesRegionNorth America
MNI Washington Bureau | +1 202-371-2121 | brooke.migdon@marketnews.com
USPolicy NewsExclusiveStorySourcesRegionNorth America

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