Companies Expecting Applicant Surge May Be Disappointed As Unemployment Benefits End
The additional federal unemployment benefits enacted during the worst of the coronavirus pandemic are coming to an end over the Labor Day weekend, with short-handed employers, such as restaurants and other service industry enterprises, hoping that more workers will now apply for unfilled positions.
The impact might not be so dramatic, however, considering the experience of states that have already ended the supplemental cash payments with the aim of encouraging workers to look for jobs again.
“We don’t expect the end of emergency (unemployment) benefits to lead to an immediate jump in employment and in the near-term expect it will weigh more on personal income and spending,” wrote Nancy Vanden Houten, lead U.S. economist for Oxford Economics, as reported by Reuters.
Half of the states ended extra payments over the summer, with payrolls rising 1.33% from April to July in states that did so, according to a Wall Street Journal analysis of Department of Labor data. But the payroll growth rate in the 25 states that didn't cut off payments was barely different — even slightly higher — at 1.37%.
Some economists believe that the end of benefits will boost employment, however. Goldman Sachs predicts that the nationwide September benefit cutoff will account for 1.5 million job gains by the end of 2021, the WSJ reports.
About 7.5 million unemployed workers are facing the end of the extra benefits, according to The Century Foundation, which notes that it is the largest cutoff of unemployment benefits in U.S. history, considerably larger than a cutoff of 1.3 million workers in 2013 and 800,000 in 2003.
Over the course of the pandemic, the programs set up in March 2020 in the American Rescue Plan Act have provided roughly $800B in assistance, including to those who lost standard full-time employment but also part-time and gig workers whose livelihoods were impacted by the health crisis.
The end of payments might have an impact on consumer spending, which could reverberate in the apartment industry as households find it harder to make rent, as well as the retail industry as households cut back on spending.
At its peak in May 2020, the programs were providing an additional $600 a week to 25 million people, which kept many households afloat during the largest-ever spike in U.S. joblessness.