I was terribly disappointed by this article by Arthur Delaney and Dave Jamieson at the Huffington Post. It makes some of the same arguments I have about why employers aren’t able to find employees:
While some employers may be struggling to hire for one reason or another right now, economists say generous unemployment benefits are not the cause.
If demand for workers were exceeding supply, then the price of labor would be shooting up. But as Federal Reserve Chairman Jerome Powell said last week, overall wage growth hasn’t increased. “We don’t see wages moving up yet, and presumably we would see that in a really tight labor market,†Powell said at a press conference. “And we may well start to see that.â€
It’s terribly long on testimony, too frequently by interested parties, and too short on actual empirical evidence.
I think the most likely explanation is that it’s multi-factorial with too-generous unemployment benefits, breakdown in hiring networks (something mentioned in the article but not substantiated other than by testimony), skills mismatch, mismatches between where the unemployed people live and where the jobs are, pay, COVID-19 risk, and who knows how many other factors all playing a part. It would be nice to be able to evaluate their relative roles.
Noah Smith has a blog post pointing to UI benefits having a significant role and suggesting the government offer a one time payment of about $4k to get people off the dole. I think his main points of evidence are:
1. Workers are working more hours (anecdote: daughter working more overtime at Walmart because they are having trouble getting workers)
2. Ratio of job openings to unemployed is high.
3. Workers are quitting jobs at higher rate than before pandemic (anecdote: Walmart workers are not showing up for shifts at greater rate knowing they are likely to get fired)
He also points to schools being a factor if they are not completely open yet.
https://noahpinion.substack.com/p/lets-give-a-fond-farewell-to-pandemic
Or, in other words, we shouldn’t just dismiss the possibility that UI benefits are having some effect on employment as the HP article really wants to. I’ve got to admit that the trope “economists say” without producing empirical evidence rankles me. Pointing to one, highly interested economist who says so is, at the very least, not incontrovertible proof.
I’m completely ready to believe that the benefits are not the only factor but I’m not ready to believe that they’re not a factor at all. It doesn’t help that some of the most progressive members of the House have proposed granting permanent benefits to people who just don’t feel like working.
I think it is pretty clearly multi-factorial. UI is part of it. Unfortunately too much of what I read says it is all due to UI or UI is not a factor at all. Knowing the relative contributions would be nice but pretty hard to do. For example you left out working conditions/atmosphere.
Query- It was my understanding that if you are out on UI and your old job is offered back to you that you lose your UI if you decline going back. Not true? Depends?
Steve
Yes, that’s probably a factor. One of the things I have noticed in working with Millennials is that atmosphere is considerably more important for them than it was for me and my peers when we were their age. Maybe my experience is unusual in that regard but I doubt it.
There are all sorts of factors. For example, we don’t really know how many of the jobs being advertised actually exist and how many are fishing. There are some claims that the job market is too tight for fishing but I suspect that varies from place to place.
Oops, second anecdote was supposed to be: “Walmart workers are not showing up for shifts at greater rate knowing they are UNLIKELY to get fired.”
@steve, I’m not sure what the rules are and suspect they vary somewhat from state to state. Illinois has had a lot of problems with processing unemployment claims.
Did some quick reading. First, in general you do lose your benefits if offered your job and dont go back, however it only happens if the employer reports you and that is not mandatory. Second, during this time, you can see your benefits if you can prove you need to stay home to care for family or similar. The job also needs to be fairly similar and the employer must provide a reasonable safe environment for returning.
Steve