America's restaurant owners complained for much of spring that they couldn't hire enough staff because their workers chose to stay at home and receive unemployment benefits. More than 20 states announced in May that they would be withdrawing from federal jobless assistance programs. These programs, which included an additional $300 per week to regular state benefits, were led by Republicans. A New York Times poll found that 52 percent Americans believe it is time to end the extra benefits.AdvertisementThis has raised many questions. Some questions are simply factual. Were the business owners correct in their complaints or did they exaggerate a small problem (and be bitter about having to pay more for their employees)? Do businesses hire faster in states that have cut benefits earlier? Some people make more moral judgments. Is it a bad thing for people to take their time returning to work even if they can find a job immediately?AdvertisementAdvertisementFor a while, we won't be able to give definitive answers to the most important facts. We are beginning to see a clearer picture as more data on the labor market and surveys come in. This mostly matches what most people would guess based on common sense. While some people may choose to continue receiving unemployment aid over a job, there are many other factors that affect the labor market, such as the lingering effects of COVID.AdvertisementFirst, the pace of hiring has been slower than economists expected based on the current number of job opportunities, even after June's better job numbers. According to Jason Furman, a Harvard economist, the internet is flooded with help-wanted ads. Based on this sheer volume, you would expect that 29 to 34 percent to find a job each month. Instead, just 24 percent are finding work, which leaves about a million people unemployed.AdvertisementAdvertisementWe also know that some Americans take their time returning to work, if not because they have UI. How do they do it? They have said it. According to Indeed.com's Hiring Lab, 5,000 Americans were surveyed by the Hiring Lab about their recent job search. Most of those who are interested in finding work said they weren't looking urgently. About a tenth of those surveyed stated that unemployment benefits were a reason. Although it wasn't the only reason, family care and stretchCOVID concerns ranked higher.AdvertisementAdvertisementHow much has the increase in unemployment benefits actually slowed down employment? We don't know. Economists from the Federal Reserve Bank of San Francisco recently found that the $300-per-week extra benefit could be slashing 3.5 percentage points of the rate atwhich Americans find jobs now. This is a little more than the quarter Furman identified. It is not clear how reliable these findings are as they are based upon an estimate of the impact unemployment had on the labor market in 2020. The researchers simply extrapolate this forward.It is also not clear if cutting benefits early makes Americans return to work more quickly. According to the Wall Street Journal, the unemployment rolls are falling faster in states that have withdrawn early from federal unemployment programs. The numbers are more complex if you examine them closely. Only five states have chosen to stop the $300-per-week increase in unemployment insurance benefits, indicating that other factors are important in determining the speed of states' recovery.AdvertisementThe super-deluxe federal unemployment programs may slow down people's return to work. However, how much is still unknown. I'm sure that in a year, some economists will have semi-precise estimates on how it affected things. Otherwise, the argument will be largely academic.AdvertisementEven though I've only spent a good part of the article on it, the technical and sometimes cryptic debate about the extent to which unemployment insurance has prevented people from getting jobs might just be less important than the ethical discussion about whether or not we should care. Businesses that have been dealing with the pandemic are clearly frustrated. Some may even be losing revenue due to insufficient staffing. According to the Times poll, many voters are not happy that the federal government is supporting people who can easily find work at this time. These issues are not considered disasters in the grand scheme for a pandemic response. The UI program is clearly still beneficial to a large portion of working-class Americans. It takes away the financial burden from parents who need to be at home with their children, and gives the jobless the time and flexibility to find work that suits them. Although unemployment payments make it harder for businesses to hire workers, they also give them leverage to get raises, particularly in the hospitality sector, where wages are high. Some people are just mad that their burritos are going to be 4 cents less. Personally, it doesn't bother me.
