That well known socialist rag, the Wall Street Journal, has done its own analysis of job growth in states that ended expanded UI benefits early:
Nonfarm payrolls rose 1.33% in July from April in the 25 states that ended the benefits and 1.37% in the other 25 states and the District of Columbia, the Journal analysis of Labor Department data showed. The payroll figures are taken from a government survey of employers. The analysis compared July totals with April, before governors in May started announcing plans to end or reduce the benefits during the summer.
I'll admit that this is a surprising result. I never expected the early end of UI benefits to have a huge effect, but it ought to have some effect on whether people start looking for jobs. So far, though, it sure seems like the effect is either zero or minuscule.
I've mentioned before that the labor market seems a little wonky in some way that I can't quite put my finger on, and this is yet another piece of evidence for that. I'm still not quite sure what's going on, though, or even what I really mean by "wonky." Something just seems a little off. Whatever it is, it's why I don't think we're truly missing 10 million jobs. I suspect that it's more 5-6 million, and that's all we're ever going to get before job growth returns to its normal growth rate. We'll see.
Amazing that in a world of experts nobody has yet come up with a unified theory about what the hell is happening in the job market.
Restaurants and small stores in my city are reducing hours because they can't staff up. I know several people in the corporate world that can't fill positions because of a total lack of applicants. It's like a not-small group of people just dropped out of the workforce. But where did they go? How are they getting by without a paycheck?
You don't need that paycheck once you are six feet under.
They retired or said "F It", i don't want to work with asshole customers anymore?
Ok lets think this thing backwards. I'm a guy so I'm used to this
Assume the pandemic started in January 2020. You are 61 years old at the start and suddenly YOU are unemployed. You collect for a year due to extended benefits then you realize Delta is not gonna end the pandemic any time soon what do you do? In jan 2021 you're now eligible for Soic Sec bennys
You were born in 1959 at the tail end of the baby boom
So you and all those that came be fore you in the babyboom decide to RETIRE rather than take the chance on dying They had 3 covid payouts, UI bennys and now social security. So for those who were 62 to 72 and still working - this was a no brainer.
We have a booming economy with the older part of the work force faced with a decision - work with risk, or retire and control your own destiny.
The baby boom work force just up and left - just when things got exciting in the job market.
This hurt to the economy will last a LONG time - we have more folks demanding services - and no bodies to fill those service jobs.................
In addition you have entirely new genre's of work
Uber eats, door dash etc - these were not major employers pre pandemic they are now !!!
I think retirement age people staying out is a big factor. At some point the Baby Boomers were going to leave the work force in massive numbers and COVID accelerated it.
Another factor is two income families where the 2nd income after expenses wasn't actually much. Because of intertia and the costs being spread out to multiple places people just kept working, now with COVID they had a year where there were no day care costs, no extra gas money spent commuting, no money spent on buying lunch every day, etc. and they were able to sit back and say "wow when you factor all that in I was working 40 hours every week to net an extra couple hundred bucks a month, totally not worth it."
Probably closest to accurate.
It might have been worth it if one could spend the money on a cruise, a fancy vacation, a summer camp or the like, but a lot of those options were closed off as well.
At some point the Baby Boomers were going to leave the work force in massive numbers
Were going to leave the work force?
Boomers have been exiting the workforce in ever larger numbers for the entirety of the current century. The oldest of them are already 75 (Bill Clinton's age).
Yup!
I quit my job in late March of 2020 since I was 64 and my job had me in and out of 17 locations (not all in a day), all of which had other staff in and out.
I wasn't going to apply for UI but the governor on the TV constantly saying "Apply, apply apply!," so I did. But since I had quit, it was put in line for adjudication. As my money was running out, I applied for Social Security (a bit earlier than I had intended before covid) and Medicare.
So I had money coming in with health insurance costs gone and vehicle maintenace costs down to almost nothing. Then the state finally adjudicates my claim and grants it, so I get several weeks back UI and continued for several weeks.
I stopped taking the UI around late fall I think. I had come to the realization that if Covid ended right then, I would not be out looking for work.
I'm pretty sure my finances have never been in better shape.
Wasn't the old rule of thumb that retirement expenses are 2/3 of working expenses? Insane medical costs have probably made it worse. I'll bet a lot of people have just retired.
Could just be overwhelmed by other differences between the two categories of states that run the other way.
States that didn't cut off benefits may be blue / purple states with better over-all economies and higher pay for service sector workers. Also, there may be a shift from restaurant workers to delivery and shopping services. I definitely see that in my area.
I disagree. Nonfarm payrolls are a different bird. Look at household employment. Gig workers who the government generally call self employed were leeching and not being counted.
Interesting that a month or so the local repulsives swore that those receiving UI would all be racing back to work as soon as the benefits were cut. Well, in some states they have been cut for a while and there was no race to the job market. Just shows you how much the repulsives use critical thinking skills, along with their bias.
Incorrect. Many states didn't even cut them off after the June sampling period. You just don't fill holes overnight.
The simplest explanation, though not necessarily the correct one, is that the people who fill the lowest-paying jobs are not yet feeling the pinch. As Kevin has shown before, savings rate has been very high. Those in the low-paying jobs got considerably more than their normal pay from the augmented unemployment plus the checks. Some have not been paying rent. Such people may be holding out for better jobs than they had, and also for less dangerous covid conditions. The shortage of workers has probably also been exaggerated by anecdotal media stories.
But there is no reason for Kevin or anybody to fully understand what is going on. This is very different from any previous recession for several reasons. Economists don't really understand how things work in the best of times, so predictions under current circumstances are of very little value.
Lack of childcare may be a factor that is underestimated.
Schools are back to in person across the country--If that holds, then we'll see a change in the employment numbers.
Maybe a lot of these people are being paid under the counter in bitcoin?
Isn't this exactly the result you would expect? Taking away stimulus slows down the economy. I suppose that some people were in fact forced to accept jobs when the benefits ceased but those jobs paid less than the enhanced benefits so they did less for growth. If people got offered more than the benefits thy would have accepted jobs without coercion.
Maybe it has more to do with people trying to wait out the pandemic, regardless of vaccination status, by exhausting whatever extra money they'd been able to save up from the emergency added UI and the stimulus checks?
Personal saving rate -- https://fred.stlouisfed.org/graph/?g=Gumi -- seems to reflect this intention to exhaust the extra savings.
My wife and I are still going out to events and restaurants at an extremely reduced rate due to COVID still being a significant concern. I imagine lots of people are doing the same. And, unfortunately, that has economic consequences. If the unvaccinated/unmasked weren't being as belligerently stupid as they insist on being, for as long as they have, it's not a big stretch to think that we'd be in a safer world and people would be out spending more money, and that would result in more hiring.
any chance there is a strong correlation between states that cut off the UI benefits and states that the economy is being held back due to high rates of infection?
Logically, ending UI early would encourage people to seek work earlier. That's what I expected would happen. What I didn't think of was that also logically, a lot of people will have less money, leading to less spending, leading to less employment. My guess would be: the two effects cancelled each other out.
Touching on the enhanced UI and other relief programs, and the waste anything but time files: https://abcnews.go.com/Politics/government-watchdog-finds-pandemic-relief-fraud-potentially-worth/story?id=79751204
One possible explanation is that what you are really looking for is what difference the ending of extended unemployment made in states that did so vs. If they did not do so.
And same for states that did not - you need to compare to what it would have been if they did.
But of course we cannot know what would have happened if they did something else.
So the whole underlying assumption in this comparison is that the change in payrolls would be the same in both sets of states if they had the same policy. But is that true ? Is there some other factor that caused payroll to increase in the orange states on the chart compared to the blue states that is just offsetting the advantage the blue chart states ( note blue on chart are mostly " red" states) by ending unemployment extension.
One possibility which sounds possible but have not checked is that I expect that the states that ended extended unemployment first had also reopened earlier. So maybe they had some payroll growth for that re catching up with the pandemic loss already in earlier months but the orange states are still getting a greater " bounceback" growth from a later reopening.
To really look at it, you would need a regression analysis controlling for other variables but still will be hard to separate out this factor as I expect it will be highly correlated with other things related to the pandemic.
Another possibility is , if the states ending unemployment also had a bigger coincident covid wave which depressed employment more. Comparing july and April. April pretty much every state was ( unjustifiably) feeling fairly complacent about covid. July the current wave was hitting some states and getting scary but not others yet.
Might it be that unemployment increased less to begin with in states that ended enhanced UI benefits early? IIRC, blue states that have a lot of service jobs catering to CBD office workers took a big hit early in the pandemic. These states tend to also benefit from a lot of business-related travel, conventions and so on (as well as tourism). NYC got crushed early on. And I remember reading that my own hometown's hotel occupancy plunged more than any other major city's.
This is contrast to states where employment was less heavily impacted by lockdowns: farms and mines and factories mostly continued to operate.
So, we'd expect to see states with the highest spike in unemployment (NY/CA/MA etc) have the strongest gains in jobs, once the economy began to recover. And it seems to me this effect might well have swamped any countervailing influence exerted by enhanced unemployment benefits (which was probably pretty modest to begin with).
Anyway, just a theory.
If you see my post , exactly what I was thinking might be true . If we saw jobs for the entire pandemic period in the graph, might be able to tell better .
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Shouldn't that really be the *expected* result? Take money OUT of an economy and it should do worse.....