People didn’t rush back to work when their unemployment benefits were cut early, a new study finds, despite what some GOP governors predicted

Arizona Governor Doug Ducey wears a black suit jacket and speaks into a microphone on a stage.
Arizona Governor Doug Ducey cut federal employment benefits in the state on July 10.

  • A new study found employment fell slightly in states that cut federal unemployment benefits early.
  • Some GOP governors have blamed unemployment benefits for sluggish jobs growth.
  • The study analyzed US Census Bureau survey data from between April and July.
  • See more stories on Insider’s business page.

People did not immediately return to work in some states that cut federal unemployment insurance (UI) early, a new analysis found.

In the 12 states that cut the benefit on either June 12 or 19, employment was largely flat in the weeks after, Arindrajit Dube, an economics professor at University of Massachusetts Amherst, found during an analysis of US Census Bureau data.

“Certainly there was no immediate boost to employment during the 2-3 weeks following the expiration of the pandemic UI benefits,” Dube said.

Twenty-six states, mostly led by Republican governors, have said they will cut – or have already cut – the federal government’s $300 weekly top up for unemployed Americans ahead of its planned September 6 expiration. Dube’s analysis focused on the impact of cutting the $300, as well as states that cut other pandemic UI programs.

Cutting UI was followed by a slight drop in the share of the population receiving benefits – but Dube found the proportion of people employed also fell slightly in these states over the same period.

Employment share rose 0.2 percentage points in states where benefits were still available, Dube said.

Read more: Slashing unemployment benefits isn’t just a terrible economic idea – it’s a cruel gut punch for millions of Americans

Dube’s study used the most recent Household Pulse Survey (HPS), which collected employment data on 18-to-65-year-olds for the April 14 to July 5 period. The HPS asked respondents whether they had received UI in the past seven days, and if they were currently in work.

Some governors and businesses have blamed unemployment benefits for sluggish growth in hiring, and said the money held back economic growth.

Arizona Governor Doug Ducey, who cut all federal UI programs in the state on July 10, said in a May press release that he wanted to use “federal money to encourage people to work … instead of paying people not to work.”

Dube’s findings suggest that, at least in the short term, withdrawing funding has not led to a boom in employment. We need to wait longer to understand the full impact of the cuts, he said.

Dube’s analysis is supported by an Indeed study in June, which said that overall job-search activity had declined in states that cut benefits early.

But the evidence is mixed: Data from the Bureau of Labor Statistics released in July showed that 13 of the 15 states where employment rates are closest to their pre-pandemic levels had cut the $300 federal UI payments early.

The number of initial UI claims unexpectedly rose to 419,000 in the week ending July 17, up 51,000 from the previous week, despite a general downward trend, according to figures from the Department of Labor.

Read the original article on Business Insider

What to say when someone tells you ‘people don’t want to work right now’

A sign reads "We all quit" at a Burger King in Nebraska
  • As stories about labor shortages continue to pop up, it might seem like no one’s working.
  • The truth, of course, is far more complicated – just like the strange economy right now.
  • Importantly, the pandemic is still ongoing, and workers have a lot more options.
  • See more stories on Insider’s business page.

It’s a common refrain right now: No one wants to work. It’s a twist in the story of a not-quite-post-pandemic economy that left millions of people unemployed, as understaffed businesses struggle to hire and workers quit en-masse.

But, as always, the economy is complex, and so are the myriad of people who keep it running. A simple phrase doesn’t capture all of the complexities of why people may or may not be working. If you want to inject some nuance into your next conversation about the labor shortage, here’s what to know.

The pandemic is still going on

If the Delta variant has taught us anything, it’s that COVID is still spreading – and it’s still impacting the economy.

For instance, childcare – or lack thereof – has emerged as one potential driver keeping parents out of the workforce. With schools and daycares shuttered, some parents left their jobs to provide care. Others may have lost their roles, and delayed searching for new ones while their kids were at home. Either way, they may not have returned to the workforce yet.

Sociologist Jessica Calarco tweeted recently about the challenges facing parents as children remain unvaccinated and variants spread, noting that classrooms and daycares may have to temporarily shutter as cases come up.

“Given that kids aren’t going to be eligible for vaccines any time soon, and with Delta spreading rapidly, we should expect a whole lot more of this to come. I won’t be surprised if we end up with a whole bunch more 2-week gaps (or longer) in childcare this fall,” she wrote.

COVID fears have also kept some older workers out of the workforce. They were disproportionately impacted by job losses early in the pandemic, and some have called it quits and retired altogether.

Fed Gov. Lael Brainard said that labor shortages should fade by fall as schools reopen and fears abate, along with federal unemployment benefits.

Workers are taking advantage of more options

A huge amount of workers are quitting their jobs, which seems counterintuitive. In May, 3.6 million workers quit their jobs – but it may be because they are taking advantage of new opportunities.

Wages in industries that are having difficulty staffing up – like leisure and hospitality – are on the rise, but they’re still relatively low compared to other fields. Dr. William Spriggs, an economics professor at Howard University and chief economist at the AFL-CIO, previously told Insider that “workers who are employed are finding ways to get jobs in the sectors that are expanding and hiring.” Those sectors might offer higher wages, or at least more consistency than their prior roles.

It’s what Insider’s Aki Ito calls The Great Reshuffle: An unprecedented labor market, coupled with a rethinking of what workers want out of both work and life, has led many to exit their positions or seek out new ones. The market out there for workers is competitive, and many are finding higher salaries or better positions as they depart their old roles.

And yes, some workers may not be returning because they’re benefiting from enhanced unemployment benefits. As Insider previously reported, the consistent pay from unemployment – as well as the fact that it’s higher than what some workers made before – has caused some to rethink work.

“I just think that UI has just at least fixed everyone’s brain enough to see how f—ed up the wages are,” Matt Mies, an unemployed 28-year-old, previously told Insider.

But, as always, the picture is still nuanced. Many workers will find themselves cut off completely – including those who have been frantically searching for work.

Read the original article on Business Insider

Congress is sitting on an easy solution to speed job growth without causing inflation

pelosi schumer
Speaker of the House Nancy Pelosi and Senate Minority Leader Chuck Schumer speak after a press conference on Capitol Hill on December 20, 2020 in Washington, DC.

  • Congress should suspend employer payroll taxes for businesses that expand their current payrolls with new hires from the long-term unemployed.
  • This kind of targeted tax cut was already done before in 2010, proved to be bipartisan, and doesn’t cause inflation.
  • A CBO study ranks this tool in the top tier for being cost effective in reducing unemployment.
  • Joseph S. Fichera has served since 2000 as chief executive officer of Saber Partners, LLC, a boutique financial consulting firm for regulators and corporations.
  • This is an opinion column. The thoughts expressed are those of the author.
  • See more stories on Insider’s business page.

June’s jobs report shows the economy is recovering, but the nation is still down 7.5 million jobs from over a year ago when the unemployment rate was less than 4%. Today, we are not near that number, and more than 42% of those unemployed have been that way for more than six months. A year ago, that number was 7.1%. Small- and- medium-sized employers are moving cautiously, unable to raise wages without higher consumer prices, which could trigger inflation as well as hurt their business. And the unemployed face higher costs, like childcare, if they ever even get a job offer.

Congress can help create jobs faster across all industries without fueling inflation in a way that is cost-effective and should be bipartisan: Simply suspend the federal employer payroll tax – currently at 7.5% – only for employers who increase their payrolls by hiring people who have been out of work for six months or more.

Suspending the federal payroll tax for hiring the long-term unemployed would be a boon for reducing unemployment

This simple move, which was done before in 2010, would give employers a clear, certain, and targeted financial incentive to focus on hiring the long-term unemployed. According to the Congressional Budget Office (CBO), a payroll tax suspension targeted and tied to expanded payrolls is one of the most cost-effective ways to increase employment. Something similar – a payroll tax-credit for keeping current employees – was included in the most recent stimulus bill, but nothing was done for creating jobs or hiring the long-term unemployed.

The payroll tax suspension would be for a limited time. Tying it to employers who hire the long-term unemployed helps by making it easier for these employers to grow by increasing their payrolls without increasing prices. It could even lower some prices because labor costs would be less. Or, employers could use their tax savings to raise wages as they get back in the hiring game with an extra 7.5% in their pocket. It’s not a guarantee that wages will rise, but it does make it more likely. With a minimum wage increase off the table for the time being, Congress needs more tools to address the employment situation.

Washington’s plate is full of “big and bold” initiatives that are important for the long term. Most rely on direct government spending and are potentially controversial. A targeted tax cut is a form of government spending but it can be accomplished faster and with less bureaucracy, leading to tangible results well before the midterm elections.

We can be confident of getting results because the Obama-Biden administration and a bipartisan group of lawmakers did this before. In 2010, Congress passed the Hiring Incentives to Restore Employment (HIRE) Act which suspended most of the employer payroll tax for one year in the wake of the financial crisis. The bill got 70 Senate votes – 11 from Republicans. While negotiations continue on the Biden administration’s American Jobs Plan, Senators Chuck Schumer and Mitch McConnell and Representatives Nancy Pelosi and Kevin McCarthy could “rehire” the HIRE Act; the bill just needs a few updates. Employers understand it and the cash benefits for employers can begin quickly.

Tried and tested

This approach is not a shot in the dark. A January 2010 CBO study concluded that suspending payroll taxes targeted to employers who expand their payrolls was the second-most cost-effective way to stimulate job growth – following direct payments to the unemployed. It gets a “bigger bang for the taxpayer buck” than other Washington efforts to increase employment.

Why not repeat in 2021 what was successful in 2010? It could be the elusive “common ground” both sides say they seek.

In 2010, the employer payroll tax suspension was for one year even though CBO estimated a much bigger effect on creating jobs over five years. Today, we should re-employ the HIRE Act with a guarantee through at least 2023.

The counter argument is that rapid post-pandemic job growth will put the long-term unemployed back on the payroll without needing more financial incentives. Then the Biden jobs and infrastructure plans will kick in, and we are home free. But Biden’s plans are moving slowly and the percent of long-term unemployed has not decreased much despite historically strong job numbers. The current jobs hole is very deep.

Some employers have raised wages to get new employees, others are worried that current rates of economic growth have inflation just around the corner, despite the Fed’s considerable efforts to prevent that.

Using the tax code now, across all industries, for payroll expansion focused on reducing the long-term unemployed helps ensure this growth happens without overheating. A payroll tax suspension reduces a core cost for a limited time. It encourages the business to expand, grow, and be more productive. Moreover, the approach is transparent and easily audited to prevent waste and fraud that often follows government direct-spending programs.

To be sure, some employers could pocket the savings from a payroll tax suspension as profit, and firms already expanding payrolls would get a windfall. A payroll tax suspension also leaves out tax-exempt organizations, and state and local governments, which do not pay federal payroll taxes. Sadly, few economic tools get perfect efficiency scores. Though legitimate concerns, these are minor problems given the serious lag we have seen in reducing long-term unemployment. Besides, the priority is growth in the private sector, not the government.

An employer payroll tax suspension has been tested. It is targeted at hiring the long-term unemployed, and it’s a quick, bipartisan tool. Congress and the president should remember their bipartisan history and update the HIRE Act now.

Read the original article on Business Insider

I own 2 Hamptons hot spots that are busier than ever – but the worker shortage is crushing us

Zach Erdem seated at his Southampton restaurant Blu Mar.
Zach Erdem seated at his Southampton restaurant Blu Mar.

  • Zach Erdem is the owner of 75 Main and Blu Mar, two eateries in Southampton, New York.
  • Since reopening in June, Erdem says he’s struggled to find workers despite increasing the hourly pay.
  • Here’s what hiring has been like for him post-pandemic, as told to freelance writer Jenny Powers.
  • See more stories on Insider’s business page.

This summer has been busier than ever, and while it’s wonderful to finally be able to reopen our doors to full capacity and welcome our guests back, there’s a major caveat – it’s been virtually impossible to find enough staff.

Between my two restaurants, I have 87 people on staff. In an ideal situation, that number would be 100. But some of my staff weren’t interested in returning once we reopened – they told me they’d rather stay home on unemployment. I’ve had no choice but to seek out additional help.

I recently spent $2,000 posting job listings on Indeed and only received 10 resumes.

Prior to the pandemic, I never had to post jobs. People would just come in looking for work.

The people of Southampton have long supported me, so I always look to hire from within the community. I’ve also been known to approach customers I think would be a good fit to see if they’re interested.

These days, the tables have been turned and the employees feel like the real bosses, calling the shots in terms of how much they want to get paid and telling me when they want to work. My hands are tied in many instances; I have to do it if I want to keep operating.

In an effort to keep my staff in place and attract more talent, I increased the hourly pay, but I still can’t find enough people.

Last year, our dishwashers made $15 to $16 an hour; now it’s $19 to $22. Busboys, servers, and bartenders make $10 an hour plus tips and hostesses make between $18 to $30 based on their experience. Last week alone, some bussers took home $2,000 while some servers took home $5,000, because we’re busier than ever.

When it comes to hiring hostesses, I have three main criteria.

They must be fluent in English because they are representing our front of house and interfacing with everyone who walks through our doors; they must be familiar with POS (point of sale) systems to handle takeout orders and reservations; and they must be able to smile despite whatever may be going on. That last one is sometimes the hardest part.

Being in a front-of-house role is a tough job, especially these days now.

People are impatient and often it’s the hostess that will get the brunt of it.

Customers will yell and scream and complain, but we have to just grin and bear it. Last week I had a hostess burst out in tears and run into the kitchen. It’s not easy.

I insist on personally interviewing every hire down to the dishwasher.

I ask hypothetical questions that will allow me to get a snapshot of the type of person they are, like if they were free and a manager texted them to come in on their day off, what would they do? Their responses factor into whether I’d hire them, since I want a staff of team players who see this job as more than just a paycheck. At the end of the day, we spend more time at work than at home sometimes, so we have to work as a team.

I live above the restaurant and with the exception of the hour I take to exercise on the beach in the morning, I’m pretty much always at work.

Despite all the craziness, my favorite time in the Hamptons is still between Memorial Day and Labor Day.

I’ve been in the restaurant industry since 2002 when I first walked through the doors of Southampton’s 75 Main at the age of 21 and was hired on the spot as a dishwasher.

I myself rose up the ranks from dishwasher to busboy, then server and bartender to finally, manager. In 2010, I bought 75 Main from the owner who had originally hired me.

Sometimes I still can’t believe it, considering in 1994 I was living in my home city of Erzincan, Turkey, working as a shepherd and had never set foot on American soil.

Although I’m the owner now, I’m still running around, doing whatever needs to get done, including bussing tables. I’m happy if I get four hours of sleep a night.

A long time ago I vowed whatever I did, I would be the best at it, and you don’t become the best by sitting around watching everyone else work.

This month, we’re shooting a TV pilot inside 75 Main so people can see what it’s really like to work inside a restaurant like ours. It was one of our customer’s ideas. This place has all the elements of a movie: comedy, action, entertainment, and plenty of drama.

Read the original article on Business Insider

2 ways jobs and pay didn’t make sense before the pandemic that are now ‘unwinding’, according to a top economist

economist william spriggs with janet yellen
U.S. Federal Reserve Chair Janet Yellen (L) greets Howard University Economics Professor William Spriggs (R), who serves as chief economist to the AFL-CIO, as she arrives to deliver opening remarks at a summit on diversity in the economics profession at the Federal Reserve headquarters in Washington October 30, 2014.

  • Right now, a whole lot of jobs are open – and a whole bunch of workers are quitting.
  • But the labor market being weird is nothing new, according to economist William Spriggs.
  • The current shifts could be an ‘unwinding’ of more than a decade of declining wages and an aging workforce.
  • See more stories on Insider’s business page.

The labor market is weird right now.

A lot of people remain unemployed, even though the number of job openings is high and businesses are desperate to hire. Americans that do have jobs are quitting at record-breaking rates. In other words, a major reshuffling is going on in the labor market.

As it turns out, a confusing labor market is nothing new, said Dr. William Spriggs, an economics professor at Howard University and chief economist at the AFL-CIO. Spriggs told Insider that low-paying jobs and older people remaining in the workforce were both surprising features of the last 20 years of the American economy. And what seems weird right now is actually just an “unwinding” of these two trends giving way to higher-paying jobs and younger workers.

The labor shortage is actually healing major dysfunctions in the 21st century economy, Spriggs explained.

Low-wage jobs rose and real wages declined

Since the early 2000s, the number of low-wage jobs grew, even as people became more educated. (Brookings’ defines “low-wage” as two-thirds of their area’s median wage, or less.)

A Brookings analysis from 2019 found that 53 million Americans work for low wages – which comes to 44% of workers ages 18 to 64. And it’s not just teenagers; more than half of those low-wage workers fall between the ages of 25 and 50.

“It was very hard to explain how, in the 21st century, we gained so many low-wage jobs,” Spriggs said.

Though pay growth picked up in the years preceding the pandemic thanks to states raising minimum wages above the federal level of $7.25 an hour, wages have declined over the past five decades.

Now some of those past patterns are “unwinding,” said Spriggs. He attributes some of that to more consistent hours in some sectors, like those benefitting from the rise of online shopping. Workers – especially women, who have had a rockier recovery – are flocking to industries like construction, transportation, and warehousing.

“With this transition going on, the workers who are employed are finding ways to get jobs in the sectors that are expanding and hiring,” Spriggs said.

Older workers stuck around longer than expected

The other “really strange thing” about the 21st century labor market was that the number of workers over age 50 has been on the upswing, and participation for people under 25 fell. Spriggs pointed out that there was much talk about the 21st century being the “age of the computer.”

“I think everybody thought that people over 50 will continue to retire and people under 25, this would be the best cohort ever if you were young, because you will have to backfill all those jobs,” he said.

William Spriggs headshot.
Dr. William Spriggs.

Instead, younger workers were unemployed at higher rates than older workers after the Great Recession, and were then hit harder by COVID job losses.

The pandemic might have evened out generational representation as a wave of older workers opted (or were pushed) into retirement over COVID fears, layoffs, and bleak industry outlooks. The Retirement Equity Lab found in an October report that, for the first time in 50 years, workers over 55 were unemployment at higher rates than the younger cohort.

After teen unemployment dropped significantly in May, it leveled out in June, coming in close to pre-pandemic levels. Insider’s Ayelet Sheffey and Madison Hoff reported that some expected teens would step in and fill the labor shortage, but June’s jobs report seemed to disprove that theory. Spriggs agrees that “there’s no evidence of that so far.”

The current labor market rollercoaster could create lasting change beyond temporary signing bonuses and other measures employers are using to lure in workers.

“Maybe because of the shift in demand, we finally shift to some of these other jobs that aren’t necessarily higher paying,” Spriggs said, but ones with more hours. That’s a potential advantage for workers: “The annual pay is much higher.”

Read the original article on Business Insider

Bain & Company’s head of recruiting shares his top job-seeking tips for people feeling uncertain after the pandemic

Keith Bevans
Bain & Company’s Keith Bevans says new grads should be open to a nonlinear path while building their careers.

  • Keith Bevans is the head of global consultant recruitment at Bain & Company.
  • He spoke with Insider about how job-hunting has changed for recent graduates during the pandemic.
  • Job-seekers should be open-minded and flexible rather than hyper-focused on any one company or position.
  • See more stories on Insider’s business page.

The global impact of the the pandemic has left many college students and recent graduates uncertain about their professional futures.

Keith Bevans, partner at Bain & Company and leader of their global consultant recruitment efforts, understands the uncertainty many of these individuals are facing.

Bevans enrolled in Harvard Business School in the summer of 2000 during the “high-flying dotcom days” and graduated in 2002, one year after the dotcom bubble burst.

“What I saw at the time were a lot of students starting their journey toward the next degree with a clear vision for a specific job they wanted right after they got their diplomas,” Bevans told Insider.

These students had acute aspirations in mind and were hyper-focused on specific companies, departments, roles, and markets that they believed would create a direct path to their goals.

Instead, many were confronted with the realization that their desired companies were no longer hiring and that certain positions ceased to exist.

“For a lot of goal-oriented people it was tremendously unsettling. They were in part seven of their 21-part career plan and the wheels had come off.”

At the height of the pandemic, the US unemployment rate was elevated to levels not seen since the Great Depression. Tens of millions of students around the world were also at-risk of dropping out of college.

Such a substantial loss of career development opportunities has left countless professionals of all ages with uncertain futures. Here, Bevans shares tips for job seekers looking to kick their job-searching into high gear.

1. Don’t be afraid to go the nontraditional route

Bevans is quick to mention that his peers who overcame the dotcom bubble burst developed their skills in a nonlinear path in order to achieve their long-term vision.

“The most important thing you can do to prepare for your five-to-10 year career track is to understand the experiences that you need to collect to be successful. Find a job and employer that can provide as many of those experiences as possible.”

Those who were able to remain on their journey without losing their equilibrium were those who creatively sought out nontraditional routes to gain beneficial experiences, Bevans says.

Along with Bain & Company, global firms like Boston Consulting Group have adopted new hiring and intern programs in response to the pandemic. Internships and externships at PricewaterhouseCoopers, McKinsey & Company and other major firms, whether in-office or virtual, are also valuable resume-enhancers that often lead to full-time employment.

Bevans also encourages job seekers to work with nonprofit organizations that they’re passionate about; in his own spare time, he runs a tutoring program at his church and volunteers with organizations like Junior Achievement.

2. Stay resilient and keep engaging

Job hunting is a stressful endeavor for many professionals. Unfortunately, many applicants will receive more rejection notices than offer letters. In fact, when Bevans was first offered his role at the company, the partner hiring him had been rejected three times before he finally secured employment at Bain & Company.

Bevans encourages applicants to keep an open mind, engage in virtual recruitment activities, and continue pursuing the experiences that they desire, even if that doesn’t lead to a position with their dream company immediately.

To those who feel like COVID-19 has irreparably disrupted their career goals, Bevans is optimistic that the next generation of professionals and executives will rise above this challenge, just as his classmates did in the early 2000s.

“At the end of the day, there are tremendous opportunities out there and I think that the people who weathered the storm best were those who had a five-to-10-year career vision and understood the skills and experiences they needed to achieve that vision.”

Read the original article on Business Insider

There’s ‘little sign’ that ending unemployment benefits early pushed people back to work, JPMorgan says

unemployment insurance weekly benefits stimulus checks recession job losses coronavirus pandemic
Carlos Ponce joins a protest in in Miami Springs, Florida, asking senators to continue unemployment benefits past July 31, 2020.

  • Over half of the states in the US have ended federal benefits ahead of their September expiration.
  • Many governors cited the enhanced benefits as keeping workers out of the labor force.
  • But a JPMorgan note says there’s little sign that cutting off benefits brought workers back.
  • See more stories on Insider’s business page.

Over half of the states in the US have opted out of federal unemployment benefits early, citing the programs as potentially fueling the current labor shortage.

But that doesn’t seem to quite be the case. A Friday note from JPMorgan researchers Peter B McCrory and Jesse Edgerton looks at the impact on unemployment claims and spending following states officially opting out of their benefits.

They find that there’s “little sign of any differential improvement in unemployment claims or in several spending and activity measures in these states.” There’s perhaps a little jolt in spending on restaurants – which could be chalked up to workers returning to staff up eateries – but even that estimation might still be closer to no effect.

A previous note from JPMorgan said the decision to cut off unemployment benefits ahead of their scheduled expiration in September was “tied to politics, not economics.”

The role that unemployment benefits ending has played in getting more people to work is murky. For instance, The Wall Street Journal reported in late June that the number of UI recipients was falling in states that opted out early, but Insider’s Ayelet Sheffey reported that May saw strong job growth while enhanced benefits were still in place. June also saw major payroll additions, but the unemployment rate actually went up that month. All in all, the broader impact on the labor situation is still a bit of a question mark.

On the other side of the equation are the 4 million Americans who will see some or all of their benefits cut off early. Two federal programs extended who’s eligible for unemployment benefits – notably bringing gig workers into the fold – and extended how many weeks workers were eligible to receive benefits. In many states, those programs are winding down completely this summer, leaving workers without any UI income. Workers have previously told Insider that the loss of those benefits will result in them losing their homes, or exposing themselves to risky work environments.

But some jobless Americans have struck back against benefits from being ended by filing lawsuits in several states. They’re already seeing some early wins, with judges deciding that benefits should be temporarily reinstated in Indiana and Maryland while the lawsuits proceed.

“I think it certainly has the potential to start more cases,” Andrew Stettner, a senior fellow and jobless-policy expert at the left-leaning Century Foundation, previously told Insider. “The legal argument made in Indiana was based on a set of components that were not unique to Indiana law.”

Read the original article on Business Insider

More people are telling their jobs to ‘shove it’ amidst record quits

A sign at a McDonalds Drive-Thru explaining why a worker quit their job
The sign was apparently posted in Louisville, Kentucky.

  • The “take this job and shove it” indicator is high due to lack of childcare, covid fears, and migration.
  • DataTrek looks at how many job separations come from quitting, and told Insider “employers are not raising wages enough.”
  • But it may come down soon as schools reopen and more people reenter the labor force.
  • See more stories on Insider’s business page.

In May 2021, workers were still quitting their jobs in droves – yet another strange facet of the slowly recovering economy.

According to recently released data from the Bureau of Labor Statistics, 3.6 million workers quit their jobs in May, a month when there was one available worker for every job open (and there were 9.2 million jobs open). In April, the quit number was a record-breaking 4 million.

DataTrek Research has its own tracker for how many of the job separations in a month were from quits – the “take this job and shove it” indicator. That indicator reached its second-highest rate recorded in May 2021, with 67.8% of job separations driven by quits.

This number was higher in the particularly quit-heavy leisure and hospitality industry, Axios first reported; it came in at 76.4%.

The number is still slightly lower than April’s record-breaking high of 68.8%. Jessica Rabe, DataTrek’s cofounder, told Insider that quits are still driven by reduced access to childcare and fears of infection. Also significant: Workers relocating to the suburbs from urban centers.

But quits – and the “take this job and shove it” indicator – may have peaked in April. Schools are set to reopen in the coming months and enhanced unemployment benefits ending could get more people back in the labor force.

“We think the bulk of people disenfranchised by their jobs have quit by now, given this difficult nature of the pandemic over the last year,” Rabe said. “We think the only caveat is if the Delta variant or others do take off and we get another raft of workers in customer service jobs quitting their jobs again, even with higher wages, but it won’t likely be as big as the first wave.”

Yes, wages are on the rise

That reading comes as leisure and hospitality workers say they’re not going to return to their previous positions. Insider’s Grace Dean reports that a third of hospitality workers said in a Joblist survey that they won’t ever return to the industry.

Those respondents want a new work experience, along with higher wages and better benefits. That’s not to say that leisure and hospitality isn’t growing: The sector made up 40% of jobs gains in June, according to the Bureau of Labor Statistics, and added 343,000 payrolls. Wages also grew for leisure and hospitality workers at a breakneck speed, soaring 7.1% in the past year.

Even so, the quits rate in leisure and hospitality was 5.3% in May. That could be due to those wage hikes raising low wages to just slightly less low. In June, the average hourly earning for nonsupervisory private employees was $25.68. It was nearly $10 lower for leisure and hospitality workers, coming in at $16.21.

Those conflicting numbers show a strange new pandemic trend: High unemployment, coupled with high job openings. Generally, unemployment is driven down as job openings go up – since people are presumably filling those roles. That doesn’t seem to be happening here.

“The large labor shortage and elevated quits rate also shows employers are not raising wages enough,” Rabe said, “which is constraining hiring.”

Read the original article on Business Insider

Job openings climb to record highs in May as the worker shortage charges on

Starbucks Now Hiring sign
A ‘We’re Hiring!’ sign is displayed at a Starbucks on Hollywood Boulevard on June 23, 2021 in Los Angeles, California.

  • US job openings rose to 9.21 million from 9.19 million in May, marking another record high.
  • Economists expected openings to hold at 9.3 million. The reading still marks a fifth straight jump.
  • Openings matched the number of jobless Americans for the first time since the pandemic began.
  • See more stories on Insider’s business page.

Job openings in the US edged higher in May as businesses continued to jostle over an unusually small supply of workers.

Openings rose to a record-high 9.21 million from 9.19 million last month, according to Job Openings and Labor Turnover Survey, or JOLTS, data published Wednesday. That landed below the median estimate of 9.33 million from economists surveyed by Bloomberg.

Job listings climbed for five straight months as vaccination began and reopening led businesses to hire. The May increase in openings also came as hiring rebounded after dismal growth in April. Taken together, the data suggests the nationwide labor shortage grew somewhat less intense as the US entered summer.

June’s payrolls data further supports the outlook. Job creation improved again, with the US adding the most payrolls since August. Still, the unemployment rate ticked slightly higher and labor force participation held steady, implying continued slack in the job market.

Experts largely expect the labor market’s recovery to accelerate further through the summer as various factors keeping Americans from work fade. The start of the school year should ease childcare pressures and the ending of enhanced unemployment benefits should also boost participation, Federal Reserve Chair Jerome Powell told lawmakers in June. There also “may be a bit of a speed limit” on matching people with openings, but that process should play out into the fall, he added.

“I think it’s clear, and I am confident, that we are on a path to a very strong labor market,” he said in June 16 press conference. “I would expect that we would see strong job creation building up over the summer and going into the fall.”

Hiring, layoffs, and job availability

The monthly JOLTS data – which lags the corresponding jobs report by one month – provides even more detail around pandemic-driven dislocations in the labor market. The survey took on even more relevance as the labor shortage emerged, giving economists insight into which pockets of the economy are struggling the most to rehire.

Broadly, there was an opening for every available worker in May, compared to 1.1 in April. The ratio shows the US boasting as many openings as workers for the first time since the COVID-19 recession began. By comparison, it took roughly 8 years after the financial crisis for openings to match workers.

The state and local government education and educational services sectors added the most openings, with gains of 46,000 and 35,000, respectively. The arts, entertainment, and recreation sector lost the most openings with a decline of 80,000.

Quits, which soared to all-time highs in April, fell slightly to 3.57 million from 3.99 million. Quits were most common in the professional and business services sector. While down from the April reading, the elevated quits count signals Americans are confident in their abilities to find better jobs as the economy recovers.

Layoffs also fell slightly to 1.37 million from 1.45 million. The layoffs rate dipped to a record-low 0.9%.

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Maryland to continue paying federal unemployment benefits after judge rules against Governor Hogan

Larry Hogan
Maryland Gov. Larry Hogan.

  • Federal unemployment benefits will continue to be paid in Maryland after a judge ruled against Governor Larry Hogan.
  • Maryland was set to end the pandemic unemployment aid Saturday evening, which includes $300 weekly payments.
  • Governor Hogan has indicated that he will immediately appeal the decision.
  • See more stories on Insider’s business page.

Maryland will continue to pay federal unemployment benefits for at least ten more days after a judge ruled against Governor Larry Hogan on Saturday.

The benefits were set to end this weekend, but Circuit Judge Lawrence Fletcher-Hill issued a temporary restraining order requiring Maryland to continue administering the benefits, The Baltimore Sun first reported. The temporary restraining order followed two lawsuits brought by unemployed Marylanders against Governor Hogan and Maryland Labor Secretary Tiffany Robinson.

The restraining order is set to expire in ten days, which will give the courts enough time to schedule a hearing on the merits of the lawsuits. Fletcher-Hill’s ruling means tens of thousands of unemployed workers in Maryland will continue to receive the benefits, which include a $300 weekly benefit paid by the federal government.

The coronavirus pandemic-related unemployment benefits also cover self-employed workers. As of mid-June, 178,000 people in Maryland were recipients of unemployment benefits.

Hogan is one of more than 20 Republican governors who have moved to cut federal unemployment benefits early. The governors argue that the federal unemployment benefits on top of state unemployment benefits have slowed down the jobs recovery, with fewer people seeking work because of the extra money. The governors often point to anecdotal evidence of local businesses, especially restaurants, being unable to fill open positions. The federal unemployment payments are set to expire in September.

Thursday’s jobs report showed the US economy added 850,000 jobs in June, while the unemployment rate increased to 5.9%. In Maryland, the unemployment rate fell to 6.1% in May.

Hogan said the ruling by Fletcher-Hill would be “immediately appealed.”

“We’re going to file an appeal today. I haven’t read the details of the ruling but I have no idea how [Fletcher-Hill] could come up with that,” Hogan said at an Independence Day march in Annapolis, according to The Baltimore Sun.

Judge Fletcher-Hill wrote in a 14-page ruling that the plaintiffs of the lawsuit would be “irreparably harmed” if the unemployment benefits ended, and that they might be able to prove that Maryland is required to maximize the use of federal assistance programs under state law.

“As one who has enjoyed the privilege of continuous, secure employment, the Court is particularly struck by the plight of those who have had to struggle with irregular or no employment,” Judge Fletcher-Hill wrote in his opinion.

But according to Hogan, the extra $300 in federal unemployment benefits are keeping people from getting back to work.

“Thousands of businesses have no ability to get people back to work. We’ve got more jobs available than ever before in the history of the state,” Hogan said, according to The Baltimore Sun. “People that really need the help are still going to get unemployment benefits. It’s the extended bonus $300 that’s keeping people home.”

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