ExpirationSeptember 8, 2021 -
Categorized in: IAG News
On Sunday, September 5, a host of federal unemployment benefits expired. The 9.3 million people receiving benefits from the Pandemic Unemployment Assistance (PUA), Pandemic Emergency Unemployment Compensation (PEUC), Extended Benefits (EB), or $300 Federal Pandemic Unemployment Compensation (FPUC) programs will see their benefits eliminated this week.
The good news is that unemployed Americans can still claim unemployment benefits for up to 26 weeks using their permanent state unemployment insurance programs. There are also plenty of jobs available. According to the most recent Job Openings and Labor Turnover Survey by the U.S. Bureau of Labor Statistics, there were 10.1 million jobs available at the end of June.
Some economists have theorized that extended enhanced unemployment benefits coupled with a ban on evictions created a shortage of workers as the economy bounced back. With both of those provisions recently expired or overturned, the next couple of months will provide a better understanding of the degree to which these factors were disincentivizing potential workers from returning to the workforce.
While it may be one variable in the worker shortage, it is unlikely the only variable. Additional factors such as unplanned retirements, health concerns, a mismatch between employer needs and workforce skills, lifestyle changes, and a rise in self-employed individuals are likely at work.
Our current worker shortage has forced employers to raise pay and enhance benefits to retain and attract employees. Most have passed these additional costs along to their customers with higher prices, creating some of the inflation pressures that have mounted over the last twelve months.
If employers cannot find enough employees to fill their needs, then they must reduce production, slow their service, or limit their hours. This limit on supply in the face of persistent consumer demand can create both inconvenience and higher prices.
The next few months will give us an indication of whether our current worker shortage will continue indefinitely or whether generous federal unemployment benefits were motivating potential workers to stay at home. In turn, this will give us clues on whether inflation growth will remain strong or return to prior year levels.
Quote of the week: Milton Friedman: “We have a system that increasingly taxes work and subsidizes non-work.”
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