Employers struggling to fill entry-level roles could soon turn to TikTok to recruit

tik tok
TikTok is testing out a new feature to help Gen Z find entry level job listings.

  • TikTok is testing a new feature to help Gen Z users find job listings, Axios reported.
  • Despite the high unemployment rate, companies are struggling to fill entry-level roles.
  • Many employers have begun offering perks, including wage increases, to attract workers.

TikTok is testing out a new feature to help Gen Z connect to job listings right on the app, Axios reported.

This feature is designed to give users access to job openings right on the app, and will give participating companies access to interested applicants, who will be able to use TikTok videos as their resume, according to the report.

TikTok users have already been using the platform as a tool for sharing career advice as well as providing tips for job openings, interview etiquette, and resume building advice. And the app sees value in creators who are doing more than entertaining: Last summer, the app launched an initiative in Europe to fund educational content on the app.

“We want people to turn to TikTok not just for entertainment, but to learn something new, to acquire a new skill, or simply get inspired to do something they’ve never done before,” the company wrote in a blog announcing the program. “People are already doing this, and it’s a trend we want to get behind and accelerate.”

Now, Tiktok might be more than a place where users can learn new skills, it also could to get people hired. Or, in the case of businesses struggling to fill job openings, help them staff up.

Only 266,000 jobs were added in April, far fewer than the 1 million jobs expected, proving to be a dismal month for recovery.

And despite the high unemployment rate and COVID-19 restrictions loosening around the country, employers are struggling to fill job openings, leading some companies to provide incentives for job applicants.

A McDonalds in Florida began offering applicants $50 just to come in for an interview, but even that hasn’t been enough to attract potential workers.

The food service industry is especially aching to fill job vacancies. Taco Bell held spot interviews at nearly 2,000 company parking lots in April in an attempt to fill thousands of positions. IHOP will host a “National Recruiting Day” on May 19, as it looks to fill nearly 10,000 openings.

The labor shortage has converged with the larger conversation of raising minimum wage. Chipotle Mexican Grill is the latest company to raise wages as it works to fill nearly 20,000 positions. The company will increase pay to a range of $11 to $18 an hour for crew members and managers at its US stores.

The pandemic recovery has proven that employees are less willing to work long hours in labor intensive jobs like the service industry for a little more than minimum wage, as Insider’s Kate Taylor reported last month.

A majority of Americans – 80% – believe the minimum wage is too low, according to a recent poll. Lawmakers have attempted through the Raise the Wage Act to increase the federal minimum wage from $7.25 to $15 an hour, which would bring pay increases to more than 30 million Americans.

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Top economist Mohamed El-Erian warns of a jobless recovery – and recommends investors ride the liquidity wave

Mohamed El-Erian
Mohamed El-Erian.

  • Mohamed El-Erian warned the US economy could rebound without a jobs recovery.
  • The Allianz economist suggested workers might lack the skills employers want.
  • El-Erian predicted an “everything rally” and advised investors not to cash out.
  • See more stories on Insider’s business page.

Leading economist Mohamed El-Erian raised the prospect of a jobless recovery and advised investors to hold their nerve in a CNBC interview this week.

Pointing to the disappointing US employment data last week, Allianz’s chief economic adviser questioned whether workers have the necessary skills to fill the jobs available. Employers may have embraced new technologies such as AI, robotics, and automation faster than the labor market, he added.

“That’s the biggest fear we have because what we don’t want is a jobless recovery,” El-Erian said. “There’s a massive question mark as to how many will actually be able to get jobs again, or be willing to get jobs again.”

He cited improved unemployment benefits, insufficient childcare, and school closures as other potential drivers of the weak jobs data. If people are earning more by staying home instead of working, and if parents can’t leave their kids at daycare or at school, they might not be filling the jobs available.

El-Erian also recommended investors resist the urge to cash out as inflation fears and signs of market excess mount. “You will get the everything rally,” he predicted, arguing that monetary and fiscal stimulus will continue pumping liquidity into markets and boosting asset prices in the weeks to come.

“Leon Cooperman captured it really well: “Even if you’re worried about the world, you want to be a fully invested bear,'” he added, referring to the billionaire investor’s current stance on markets.

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Biden said he’d cut down on unemployment benefits, but he really might reinstate a pre-pandemic job-seeking policy

Biden
President Joe Biden.

  • Biden is pushing states to reinstate job-seeking requirements for people to stay on unemployment.
  • “Anyone collecting unemployment who is offered a suitable job must take the job,” he said.
  • It comes as the GOP ramps up criticism that unemployment aid is dissuading people from seeking jobs.
  • See more stories on Insider’s business page.

President Joe Biden said in a speech on Monday that Americans receiving unemployment benefits must either take a job that is “suitable” or lose their benefits, as he encouraged states to reinstate a pre-pandemic policy of requiring people to search for work.

“We’re going to make it clear that anyone collecting unemployment who is offered a suitable job must take the job or lose their unemployment benefits,” Biden said at the White House.

According to a White House fact sheet released after the speech, the Department of Labor will “reaffirm longstanding” unemployment-insurance requirements to ensure that states, workers, and employers understand the rules regarding the benefits.

The Department of Labor will also issue a letter to states reaffirming that people receiving benefits cannot turn down a suitable job to continue receiving their benefits.

Experts said these job-seeking guidelines were in place before the pandemic, and states scrapped them last year as the economy crashed, which caused a surge in unemployment. While the economic situation is improving, those experts said factors like a lack of childcare and school closures were keeping some people out of the workforce.

“On the whole, the Biden Administration is moving to return UI slowly like the rest of the economy to its” pre-pandemic rules, Andrew Stettner, an unemployment expert at the Century Foundation, said in emailed comments to Insider.

“Advocates are concerned that policy makers ensure that no workers are cut of off benefits because they cannot find affordable child care, and the reinstatement of work search requirements raises the stakes for this type of protections,” he added.

This announcement came after a jobs report last week that fell significantly short of expectations, with Republican lawmakers casting the blame on too-generous unemployment benefits disincentivizing Americans from returning to work.

While Biden said in his speech that “we don’t see much evidence” of benefits hurting job growth, his remarks suggested he was listening to GOP criticism on the issue.

Since the start of the pandemic, Republicans and businesspeople have criticized expanded unemployment insurance – inserted into March 2020’s CARES Act by Democrats in the House – as too generous. While the $600 federal unemployment addition to weekly benefits expired last year, Congress reinstated it in December at $300 a week, which Biden extended through September 6 as part of the stimulus law in March.

The US Chamber of Commerce called for an end to the benefits in the wake of the April jobs numbers, but Democrats like Sen. Bernie Sanders of Vermont said on Twitter that “workers desperately need” the benefits.

While states waived their unemployment-benefits work requirements at the start of the pandemic, 39 of them have already started, or are planning to, reimpose them.

Biden said: “We’ll insist that the law is followed with respect to benefits, but we’re not going to turn our backs on our fellow Americans.”

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Some GOP states are moving to end federal unemployment benefits, which could impact at least 276,000 workers

People wait on line to file for unemployment in Fayetteville, Arkansas, April 6, 2020.
People wait on line to file for unemployment in Fayetteville, Arkansas, April 6, 2020.

  • Some GOP-led states are opting to end expanded unemployment benefits early to entice workers back.
  • The move could affect the finances of at least 276,000 people, an unemployment expert told Insider.
  • Disparate state employment systems may have already caused inequities, especially for Black workers.
  • See more stories on Insider’s business page.

At least 276,000 workers are at risk of losing federal unemployment benefits in GOP-led states.

Several states are moving to cut expanded unemployment insurance in an effort to push those collecting jobless benefits to return to work.

The move comes as April’s surprisingly dismal jobs report showed just a fraction of anticipated jobs returning, and anecdotal evidence of (generally low-paying) companies having difficulty hiring enough workers to reopen in a fuller capacity.

South Carolina, Montana, and Arkansas are ending their participation in federal assistance programs for the unemployed in late June. They are chiefly targeting the $300 federal unemployment supplement, a key part of President Joe Biden’s $1.9 trillion stimulus law which expires on Labor Day.

Republican Gov. Greg Gianforte in Montana slammed the enhanced unemployment insurance on Friday, calling it “no-work bonuses” in a tweet. Prior to the jobs report, South Carolina Gov. Henry McMaster – another GOP member – said the state will stop its participation in federal unemployment by the end of June.

“This labor shortage is being created in large part by the supplemental unemployment payments that the federal government provides claimants on top of their state unemployment benefits,” McMaster wrote.

greg gianforte
Montana Gov. Greg Gianforte, a Republican.

‘They’re canceling federal pandemic benefits’

“They’re not just taking away the $300 supplement, they’re canceling federal pandemic benefits,” Andrew Stettner, an unemployment expert at the Century Foundation, told Insider.

“Those who are on PUA and PEUC, their benefits will get cancelled,” he said, referring to Pandemic Unemployment Assistance, the program providing benefits to gig workers and contractors, and Pandemic Emergency Unemployment Compensation, which doles out aid to the long-term unemployed.

Stettner calculated that at least 276,000 people could be affected in the states slashing aid two months before it is set to expire, though the amount is likely to grow as other GOP-led states like Indiana suggest they could soon follow suit.

Other states are reinstating job-searching requirements that were waived during the pandemic. Those include Maine, New Hampshire, North Carolina, Pennsylvania, and Rhode Island, The Associated Press reported.

Individual states rolling back federal unemployment benefits could have a disproportionate impact on marginalized workers. A report from the left-leaning Economic Policy Institute (EPI) looked at how much of the UI disbursed in each state was from federal benefits. The EPI report notes that this could impact workers along racial lines, since states where Black Americans make up a larger share of the population tend to have weaker UI benefits.

In South Carolina, for instance, around 76% of total UI came from federal programs in the fourth quarter of 2020. Arkansas and Montana both leaned heavily on federal benefits in disbursement of UI benefits, with federal UI making up 74.7% and 68.7% of their total disbursed benefits, respectively.

“The US economy is still down 8.2 million jobs from what we had prior to the pandemic – and if you account for people newly entering the workforce since then, we are down over 11 million jobs,” David Cooper, a senior economic analyst at EPI, said in an email to Insider. “So, the economy is simply not at a place where we should be cutting back UI benefits. There are far more people looking for work and unable to find it than there are employers unable to fill vacancies, and pulling back on UI will only slow down the recovery.”

President Joe Biden doubled down on the need for unemployed workers to get back to work in a Monday address, saying “we’re going to make it clear that anyone collecting unemployment who is offered a suitable job must take the job or lose their unemployment benefits.” But, he noted, COVID-19 exceptions are still in place “so that people aren’t forced to choose between their basic safety and a paycheck.”

Biden’s statements don’t amount to a new policy change from his administration, therefore they only underscore steps already on the books that states can take to encourage people to jump back into the workforce.

But, Biden said, his father used to tell him that a job is more than a paycheck.

“I think that people who claim Americans won’t work, even if they find a good and fair opportunity, underestimate the American people,” Biden added. “So we’ll insist that the law is followed with respect to benefits, but we’re not going to turn our backs on our fellow Americans; 22 million people lost for jobs in this pandemic through no fault of their own.”

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The US ‘real’ unemployment rate fell slightly in April amid an otherwise dismal jobs report

unemployment jobless claims
People who lost their jobs wait in line to file for unemployment following an outbreak of the coronavirus disease (COVID-19), at an Arkansas Workforce Center in Fayetteville, Arkansas, on April 6, 2020.

  • April’s job report came as a surprise, with gains far lower than expected and unemployment up.
  • But “real” unemployment did tick down, showing at least one sign of economic improvement.
  • The jobs report contained a lot of other surprises, including increased temporary layoffs.
  • See more stories on Insider’s business page.

The April payrolls data was largely a massive disappointment, but not entirely.

The US economy added only 266,000 jobs last month, according to the Bureau of Labor Statistics, far undershooting estimates calling for an increase of 1 million payrolls. The unemployment rate rose to 6.1% from 6%, and a handful of industries shed jobs despite the easing of economic restrictions.

While nearly all gauges pointed to a slowing recovery, an alternative measure of nationwide unemployment improved slightly from its March level. The “real” unemployment rate previously mentioned by Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen fell to 8.3% in April from 8.7%, by Insider’s calculations. The rate includes workers who have been misclassified as having a job while on furlough and Americans who’ve dropped out of the labor force since February 2020.

The decline suggests about 13.6 million Americans are still jobless despite the economy steadily recovering through the spring. The number of Americans misclassified as holding a job while actually furloughed dropped, dipping from 636,000 to 558,000.

The U-6 rate, which includes those employed part-time for economic reasons, and those marginally attached to the labor, dropped again in April. It went from 10.9% in March to 9.9% in April; while that’s yet another dip, the rate is still nearly in the double digits.

Surprising and confusing data on April jobs

All of those numbers evoke a jobs report that is, in a word, confusing. Industries such as leisure and hospitality – the seeming epicenters of concerns over a labor shortage – saw the strongest job growth, while temporary layoffs also grew in April, which seems to contradict narratives of booming businesses looking to hire. Around 10 million people continue to be unemployed.

An analysis from Morning Consult found that, as of April 1, more workers expected to lose income over the next four weeks. By the end of April, adults across the income spectrum were still experiencing income loss at an “elevated” level. And the number of high-earners – those making over $100,000 – experiencing pay loss the week before actually went up.

It’s hard to say what, exactly, caused the jobs report to look the way that it did; possible reasons include unemployment benefits, temporary layoffs, and a dispiriting dip in female employment. All in all, the jobs report showed a potential turning point in recovery, marking a significant departure from the perhaps easy gains of March.

One mismatch: Childcare, and safely reopened full-time schools, are not necessarily caught up to the adults who want to rejoin the workforce, or have exited it.

“I think we’ve all been very hopeful that we’re turning the corner, and we’re moving forward, and that components of this pandemic – that the big principal issues of the pandemic are behind us – but I think that we need to rethink that,” Misty L. Heggeness, a principal economist and senior advisor at the US Census Bureau, told Insider. “That’s not true for a subset of our workforce. I think we’ve seen improvements until now because these have been the low hanging fruits.”

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4 possible explanations for the shocking decline in new jobs

help wanted
A “help wanted” sign hangs on a window of a restaurant on June 1, 2018 in Miami, Florida.

  • Experts don’t know exactly why April’s jobs report fell so short of expectations, adding just 266,000 jobs.
  • Possible reasons for the miss include too-generous unemployment benefits and temporary layoffs.
  • Experts say a labor shortage isn’t necessarily the main issue, and the news may not be as bad as it seems.
  • See more stories on Insider’s business page.

Economists thought that the economy would add a whole lot of jobs – about a million, to be exact – in April. Friday’s job reports turned that thinking upside down with a big surprise: The US economy added 266,000 jobs in April, falling significantly short of expectations.

In fact, unemployment even went up.

It’s a twist that left economists and economy journalists alike befuddled. It was especially shocking in light of March’s report showing a gain of about 900,000 jobs, and in a double whammy, the April report revised that figure down to 770,000. Also, the unemployment rate rose from 6% to 6.1%, while labor force participation actually climbed to 61.7% from 61.5%, signaling that more Americans are looking to return to work but also that more are getting classified as unemployed.

Insider previously reported on reasons that millions of Americans may be slow to return to work, like health concerns and the need to stay at home, but as results from Friday’s report found, but this dynamic rate hints it’s not as simple as a labor shortage. More workers seem to be joining the labor force – actively seeking out work – thereby bringing up the unemployment rate, but they also seem to be hesitating on taking new positions.

Of course, there’s no one explanation for why the jobs report fell so short, but it could be showing the nuances of what a post-pandemic recovery looks like, now that the economy has moved beyond March’s stimulus-powered gains and some of the lingering fissures are exposed. Separately, some economists have warned of the phenomenon called hysteresis, where the impact of a recession lingers in unemployment data after the events that caused it are gone.

Here are four reasons that might explain the jobs report disappointment:

(1) Unemployment benefits are too generous

Since the pandemic hit in 2020, Republicans and businesspeople have criticized expanded unemployment insurance – inserted into March 2020’s CARES Act by Democrats in the House – as too generous. Although the $600 federal unemployment addition to weekly benefits expired last year, it was soon reinstated at $300 per week, which President Joe Biden’s $1.9 trillion stimulus extended through September 6.

This jobs report is being seized upon as evidence that the benefits are still too generous. The US Chamber of Commerce has already called for their cancelation in the wake of the April jobs numbers.

Toby Malara, government affairs counsel at the American Staffing Association, told Insider in February that while unemployment has been “paramount” in helping people during the pandemic, it’s important to find a balance that doesn’t disincentivize people from returning to work.

Mercatus economist Michael D. Farren said in a statement that April’s jobs report might actually be better than it looks on the surface, and that while “changes to unemployment insurance probably are reducing labor supply, but workers’ primary inhibition to seeking employment is likely still COVID-19. But if the employment statistics next month look similar to April, Congress may need to take unemployment insurance back to the drawing board.”

Two states, South Carolina and Montana, have already moved to end additional pandemic unemployment benefits. Montana is opting instead to give workers a $1,200 back to work bonus, according to CNN.

But liberal economists – and the president – disagree with that assessment of UI. When asked at a Friday press briefing if enhanced UI bonus benefits were slowing down the return to work, President Joe Biden said: “No, nothing measurable.”

Later on Friday, Sen. Bernie Sanders wrote on Twitter that “We don’t need to end $300 a week in emergency unemployment benefits that workers desperately need. We need to end starvation wages in America. If $300 a week is preventing employers from hiring low-wage workers there’s a simple solution: Raise your wages. Pay decent benefits.”

(2) Women are being employed at lower rates

Overall, 165,000 women ages 20 and over left the labor force in April. Unemployment rates for Black and Latina women also remain elevated.

“If you added all of the women who’ve dropped out of the labor force since February 2020, the unemployment rate for women would be 8.1%, instead of 5.6%,” Jasmine Tucker, the director of research at the National Women’s Law Center, told Insider on Friday.

According to a Friday press release from the NWLC, it would take women 28 months to reach pre-pandemic – and that doesn’t account for potential population growth and more women graduating into the labor market.

Tucker said the April report underscores the need for more affordable and accessible childcare, as unemployed parents – especially mothers – contend with mixed reopenings and wanting to keep themselves and their families safe.

“While we’re reopening very expensive childcare centers, there’s going to be a mismatch there of who’s going to be able to afford to go back to work,” Tucker said.

(3) There are too many temporary layoffs

Counterintuitively, layoffs were unexpectedly high in the report, signaling companies are still struggling despite widespread evidence and expectations of an economic boom in 2021.

Approximately 2.1 million people said their pandemic unemployment was temporary in April.

That number is up from 2 million in March, both much higher than the 700,000 pre-crisis low and much lower than the pandemic-era peak of 18 million.

These temporary layoffs could make it harder for people to return to work, especially those with health concerns, that worry about getting sick should they choose to work again. This, accompanied by workers holding out for higher wages amidst large companies raising their minimum wages, could contribute to the poor jobs report.

(4) Seasonal adjustments could be off

Finally, a wonky explanation could account for some of the drop in job-gains data.

Seasonal adjustments measure and remove influences of seasonal patterns, like weather and holidays, to reveal how employment and unemployment change from month to month. Chris Rugaber, economy reporter for the Associated Press, flagged on Twitter that economists have noted potential seasonal adjustment issues: Non-seasonally adjusted jobs rose by about 1.1 million, showing that seasonally adjusting the data could be obscuring the true number of gains.

To be sure, this is still a difficult measure to parse right now. Seasonal adjustments typically follow a “more or less regular pattern each year,” per the BLS website, but 2020 and 2021 are far from typical years.

“You always have to take every data release with a grain of salt, and I think this one you have to take with a rock of salt,” Jan Hatzius, Goldman Sachs economist, told CNBC on Friday. But he still noted that the seasonally unadjusted number for the April report shows a gain of more than 1 million.

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Biden’s Labor Secretary insists April’s weak jobs gain of 266,000 ‘is a good number’

Boston Mayor Marty Walsh
Labor Sec. Marty Walsh.

  • The April jobs report fell far short of the 1 million growth expectation, adding just 266,000 jobs.
  • Labor Secretary Marty Walsh said he still thinks that 266,000 “is a good number.”
  • He said expanded federal unemployment insurance is still needed despite calls to end the benefits early.
  • See more stories on Insider’s business page.

The Friday jobs report was a major disappointment, as the US economy added just 266,000 jobs in April despite economists predicting a gain of at least 1 million.

But Labor Secretary Marty Walsh said on CNBC that this report should still be celebrated.

“I think as we continue to move forward here, hopefully in the coming months we are going to see lots of those Americans who are looking for jobs, finding jobs, and I’ll be able to stand in front of this camera and talk about the great gains we’ve had,” Walsh said. “But I still think 266,000 jobs this month is a good number.”

“If you look back on the last three months, the United States economy has added 500,000 new jobs per month as compared to the previous three months where it was 60,000,” Walsh said. So we are definitely going in the right direction but we still have a ways to go, there’s no question about it. We are still dealing with a pandemic.”

Insider’s Ben Winck reported on Friday that along with the disappointing job gains, the unemployment rate rose in April to 6.1% from 6%, while economists had expected it to drop to 5.8%. Possible reasons for the report falling short of expectations could include temporary layoffs and too-generous unemployment insurance.

The report highlights an increasing split between the weak jobs recovery and a booming economy led by consumer spending. For instance, US gross domestic product grew at an annualized rate of 6.4% in the first quarter – the second-strongest expansion since 2003. Insider’s Juliana Kaplan and Grace Kay reported on shortages of all sorts of items amid reopening, such as chicken and lumber, all evidence of a sudden increase in spending.

Walsh criticized the argument that unemployment benefits are to blame for the weak jobs report. He said people “obviously” need unemployment benefits given the millions of Americans who are still out of work.

At nearly the same time, the Chamber of Commerce urged an end to the $300 weekly benefits, with the chamber’s chief policy officer, Neal Bradley, saying in a statement that the “disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market.”

But Walsh remained adamant that retaining unemployment benefits is vital to economic recovery.

“We have lost restaurants. We have lost businesses,” Walsh said. “I wouldn’t say we are in the midst of pandemic … but we are still living and dealing with the pandemic, and as we continue to move forward here we will continue to recover.”

Walsh emphasized that as vaccinations continue, “we are starting to see the confidence come back.”

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If you were overpaid unemployment insurance, the Biden administration says you should be able to keep some

GettyImages 1210101977
A person files an application for unemployment benefits on April 16, 2020, in Arlington, Virginia.

  • The US Department of Labor issued guidance Wednesday that lets states waive recovery of unemployment insurance overpayments.
  • “In many cases, individuals received payments for which they may not have been eligible through no fault of their own,” the department’s Suzi LeVine said.
  • States that already collected repayments should give that money back, the department said.
  • See more stories on Insider’s business page.

When COVID-19 hit the United States, millions of Americans were thrown out of work – some 14 million between February and May 2020 alone – with claims for unemployment following in kind. Governments, and applicants, made mistakes: according to a recent report, states ended up doling out $6.2 billion in overpayments.

Now the US Department of Labor has issued guidance to states that recommends letting people keep that extra money, so long as they did not commit fraud to get it.

“Amid the pandemic, state Unemployment Insurance programs did the best they could in the face of unprecedented demand as millions of Americans filed claims for benefits,” Suzi Levine, the department’s principal deputy assistant secretary for employment and training, said in a statement on Wednesday.

“In many cases,” she said, “individuals received payments for which they may not have been eligible through no fault of their own.”

Under the first round of COVID-19 stimulus, known as the CARES Act, the federal government provided unemployed workers an extra $600 in benefits above the amount they would normally have received from their state alone. That money came with a requirement for states to address fraud, with this week’s guidance noting that those who are found to have lied must still pay back their money with 15% interest and possible criminal prosecution.

It wasn’t until last December, however, that Congress allowed states to decide whether or not it was worth their time – and morally correct – to demand that money back in every case, per CNBC; in Texas alone, 260,000 people were asked to do just that between March and October 2020, the network reported.

According to the department’s new guidance, such waivers should indeed be issued when the recipient did nothing wrong and when “repayment would be contrary to equity and good conscience.”

And if a state has already recovered the money, prior to this guidance? It should, generally, go ahead and give it back, the department said.

States, not the federal government, will ultimately make the call. But, LeVine said, they now have “greater flexibility to forgo recovery of improper payments from honest workers who continue to struggle,” allowing them to focus on those cases “where real fraud exists.”

Have a news tip? Email this reporter: cdavis@insider.com

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Biden’s new plan pledges unemployment reform, but doesn’t put money behind it

joe biden amtrak
President Joe Biden.

  • President Joe Biden unveiled the sprawling second part of his infrastructure package today.
  • It pledges an effort to reform unemployment benefits, which Democrats have championed.
  • However, the details are still vague and it doesn’t allocate funds; Democrats have been pressing for more.
  • See more stories on Insider’s business page.

On Wednesday, President Joe Biden unveiled a $1.8 trillion economic plan that would invest heavily in childcare, education, and workers.

One part of the sprawling package includes a pledge to work with lawmakers on reforming unemployment insurance, a top priority for Democrats like Sens. Ron Wyden and Michael Bennet. The White House briefing document states the president seeks a system that puts jobless aid on autopilot, meaning government help would automatically increase when the economy crashes and there’s a sudden spike in the unemployment rate.

However, the administration’s plan does not list specific goals such as a wage replacement level, nor set aside federal money for it. Still, some experts are cautiously optimistic about the trajectory of negotiations to strengthen that element of the safety net.

“It’s a good start,” Andrew Stettner, an unemployment expert at the Century Foundation, told Insider. “It’s really clear this part of the economic policymaking is definitely going to be a partnership between the White House and Congress.”

“This part is certainly not fully baked and there needs to be additional baking for what would get into the final basket of items,” Stettner said.

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Sen. Ron Wyden (D-OR).

Acknowledging the need for reform is ‘important,’ and eyes turn to what comes next

Arindrajit Dube, a professor of economics at the University of Massachusetts, Amherst, has created his own plan for reforming UI. It includes making unemployment insurance federally administered, expanding eligibility, and upping the benefit replacement rate.

The US has various state unemployment systems “with varying degrees of dysfunction” that are being held together by pandemic-era federal policies that will expire in a few months, Dube said, underscoring the need for reform.

Dube was one of the economists who’s been calling on the Biden administration to include UI reform in the infrastructure package.

“The fact that the White House did clearly acknowledge the importance of fundamental UI reform is important, even though obviously it’s better when that’s paired with specific proposals, with specific dollar amounts, and funding stream,” Dube said. He said he credits the White House for being “ambitious and thoughtful,” and looks forward to seeing more.

In Congress, Wyden and Bennet have introduced a bill to permanently bulk up unemployment insurance payments. And last week, 38 Democrats – including Sen. Bernie Sanders and Wyden – sent the White House a letter calling for permanent unemployment reforms.

Chief among their concerns is the role that temporary pandemic measures played in bolstering benefits and income. An analysis from left-leaning Economic Policy Institute (EPI) found that the Pandemic Unemployment Assistance (PUA) program – which expanded unemployment eligibility to freelancers and gig workers – made up the largest share of UI assistance by the end of 2020.

A chance to have a ‘broader conversation’

Pandemic UI also made up an unprecedented share of Americans’ incomes in 2020, and bolstered benefits (like the additional $600 in weekly benefits from the CARES Act) helped plug holes in states’ offerings.

Early in the pandemic, state unemployment systems struggled to distribute a $600 weekly federal unemployment benefit, causing delays stretching for weeks or even months for many laid-off workers.

“One thing to keep in mind is we’ve never had as many Americans who themselves or their family members have relied on unemployment insurance since probably the Great Depression,” Dube said. He added, “I think it’s a chance for us to, in the public sphere, have a broader conversation.”

Democrats argue they want to avoid repeating mistakes of the last recession in 2009. Among them are preventing painful cuts to unemployment insurance during the recovery.

“We can’t fail again to fix and update it in the wake of the second economic crisis in 10 years,” Wyden said in a statement on Wednesday. “This is a top priority of mine as we move forward.”

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American companies are struggling to hire workers, but BofA sees that fading by early 2022

kohls now hiring
  • Many US businesses are facing worker shortages as the economy starts to reopen.
  • The unusual dynamic will fade by early 2022 as the labor market rebounds, BofA economists said.
  • Expanded unemployment benefits and COVID-19 fears are likely keeping many from seeking work, they added.
  • See more stories on Insider’s business page.

A McDonald’s paying people to interview for jobs. Uber drivers holding off on rides in hopes of higher pay. Millions of payrolls possibly vanishing altogether.

The US economy is still down roughly 8.4 million jobs since the pandemic first fueled massive layoffs. That suggests hiring would quickly bounce back as the country reopens and Americans get back to spending as usual. But the opposite effect is taking place. Instead of an oversupply of workers meeting weaker demand, businesses looking to hire are coming up against a shortage of Americans seeking employment.

That shortfall is presenting an unusual and unexpected challenge to the broader recovery. Without a return to pre-pandemic employment, consumer spending will trend below its potential and leave less money flowing through the economy.

Bank of America economists aren’t particularly concerned. The shortage is likely driven by expanded unemployment benefits included in the latest stimulus package, concern around catching the coronavirus, and home-schooling demands for working couples, the team led by Michelle Meyer said in a Friday note. The bank expects that dynamic to fade by early 2022 as stimulus expires and more Americans are vaccinated.

“Therefore by early next year, COVID-related labor shortages will likely be replaced by ‘traditional’ shortages because of a hot labor market,” the economists added.

The team reiterated its expectation for the unemployment rate to fall to 4% by the end of 2021. The rate currently sits at 6%, but the government’s latest payrolls report suggests monthly job additions will average about 1 million in the near term.

Still, the “traditional” labor shortages expected to emerge next year will present new constraints, according to the bank. The red-hot labor market could “make it difficult” for ports to reach pre-pandemic employment levels even after the health crisis ends, the team said. Such setbacks could further increase factory backorders, which already swelled in recent months due to supply chain disruptions.

The amount of time Americans spend disengaged from the labor force could also slow the recovery. The post-pandemic economy won’t be the same as the one seen before the outbreak, and those changes will make the return to work difficult for millions of Americans, Federal Reserve Chair Jerome Powell said in March.

“The real concern is that longer-term unemployment can allow people’s skills to atrophy, their connections to the labor market to dwindle, and they have a hard time getting back to work,” he said, adding the central bank needs to “keep supporting them” as the labor market creeps toward a full recovery.

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