End of Unemployment Benefits Won’t Solve Labor Shortage — How Can Employers Adapt?
While employers, economists and some politicians were hoping that the end of unemployment benefits would also translate into the end of the lingering labor shortage, it doesn’t seem to be the case — at least, as of yet.
Expanded unemployment benefits that were part of the CARES Act signed into law in March, and which provided an additional $300 in weekly benefits, expired on Sept. 6.
The New York Times reports that this represents a complete cutoff of assistance to 7.5 million people as the Delta variant rattles the pandemic recovery, and another three million will lose the $300 weekly supplement.
There are several reasons for the labor shortage. Child care, for example, continues to be chief among them. The Delta variant is tampering hopes of a return to a somewhat “normal” for women, as the same issues remain, given the number of schools that have been forced to close already. And while working parents were hoping the 2021-22 school year would be easier than the last as the vaccine rollout progressed, more than half of them are at their breaking point as the pandemic lingers and variants continue to spread, according to a new Indeed survey GOBankingRates previously reported on.
Andrew Hunter, cofounder of job search engine Adzuna, tells GOBankingRates that while companies may have expected an influx of applications because of the conclusion of unemployment benefits, what they aren’t thinking about fully is that workers’ demands and expectations have both changed significantly since pre-pandemic.
“In order to attract candidates, companies need to introduce perks and benefits that cater to what employees are looking for — flexibility, a strong work experience, competitive compensation, generous PTO policies, great healthcare coverage and benefits that help with childcare and continued education,” Hunter said.
While some companies are beginning to offer these in their compensation packages, many service roles for the deskless workforce cannot offer work flexibility, he continued. “Because of this, we’re seeing people take a wait-and-see approach to job searches, as they are hopeful they can find something that checks all of the boxes on their lists of what they are looking for, rather than just some of what would make an ideal role for them.”
Paris Riha, associate wealth advisor at Arch Global Advisors, echoes the sentiment, saying the lack of a spike in job applications following the expiration of emergency unemployment benefits isn’t surprising.
“We must remember that returning to the workforce means more than just receiving a continuous paycheck. Some parents still have child care barriers, jobs that are available might not be the right fit in terms of skillset for the currently unemployed, and some individuals are hesitant solely due to health concerns,” Riha told GOBankingRates, “Eventually the workforce will come back to its pre-pandemic levels, but it will require a period of adjustment as individuals re-acclimate to the new normal.”
Several companies have started offering new perks to attract employees and address the labor shortage. For example, Amazon announced last week that it would hire 125,000 employees throughout the U.S., with an average starting pay of more than $18 per hour and sign-on bonuses up to $3,000 in select locations. And earlier this month, the company said it would fund full college tuition for its 750,000 operations employees across the U.S. through its Career Choice program, with a total investment of $1.2 billion by 2025. Amazon joined rivals Walmart and Target, as these companies announced similar efforts earlier this year.
Already, some members of Congress are trying to push back, such as Representative Alexandria Ocasio-Cortez, who announced she would introduce a bill to extend the benefits through February 2022.
“We’re introducing a bill to extend all federal pandemic unemployment insurance through Feb. 1. Benefits would be retroactive to Sep. 6. We can’t let pandemic unemployment assistance lapse when we’re still recovering from the cost effects of the pandemic,” she tweeted.
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Last updated: September 21, 2021