States that ended pandemic unemployment benefits in June (which seems all the more foolish now in August as we watch coronavirus go fourth wave) saw a slightly bigger increase in hiring than did states that are keeping those pandemic benefits in place until September:
When 26 states opted to put an end to extra unemployment benefits, there was a common thought process behind it: take away the extra support and that’ll prod workers to jump back into the labor pool.
As it turns out, that is not so. Fresh data from the payroll and benefits platform Gusto shows that states that got rid of extra unemployment benefits did not experience a “hiring boom” as a result.
Gusto economist Luke Pardue has this takeaway from his new hiring analysis: “If we want a speedy recovery, ending unemployment insurance is not the silver bullet.”
Hiring in states that ended those extra weekly benefits was about the same as in other states [Amanda Peacher, “States That Dropped $300 Weekly Unemployment Benefits Didn’t See Hiring Boost,” Marketplace, 2021.07.28].
Gusto’s data, pulled from over 100,000 small businesses that use its services, showed that the benefit-yanker states saw workforce increase 11.6% from the beginning of April to the end of June, while states who left the benefits in place until September saw workforce increase 11.2%. The difference was greatest in May when some states announced they would cancel the pandemic benefits come June; after those states actually pulled the plug, “hiring patterns in these early states returned to more modest levels and were nearly identical to growth rates in states not ending UI provisions until September.”
The policy change appeared to have more effect on the age of who was getting hired than on the total growth in hiring. The states keeping pandemic benefits in place simply filled more jobs with workers age 15 to 19, while the canceling states hired more workers age 25 and up. The canceling states actually saw their teen hiring rates go negative toward the end of June:
What little advantage the benefit-yanker states may have gained in overall workforce may be tied to higher coronavirus vaccination rates:
The week before these governors’ announcements began, across this group of states had on average 31% of all adults 18 or older fully vaccinated, according to data collected from the CDC and compiled by Oxford University’s COVID Vaccine Tracker. We then divide this group into two groups: the 6 states with vaccination rates above this average (Alaska, Iowa, New Hampshire, North Dakota, West Virginia, and Wyoming had an average vaccination rate of 34%) and the 6 states with vaccination rates below this average (Alabama, Nebraska, Idaho, Indiana, Mississippi, and Missouri had an average of 27% of adults vaccinated in the beginning of May).
Figure 7 plots cumulative employment growth between these two groups of “early” states (relatively higher and lower-vaccination rates) through the end of June. While employment trends in these two groups were similar before the announcements that they would end UI benefits early, nearly all of the growth after the announcement dates is driven by growth in higher-vaccinated states. This pattern suggests that health concerns among adult workers is indeed playing a substantial role in slowing employment growth, even in states that ended UI benefits early [Pardue, 2021.07.27].
The benefit-yankers with low vaccination rates saw almost no growth in workforce after their May announcements, indicating, as Pardue suggests, that health concerns have more ability to keep people from rushing back to crowded workplaces than free money.
You’ll notice Gusto did not include South Dakota in its analysis, but as we noted earlier, our June cancellation of additional pandemic UI benefits hasn’t erased our workforce shortage. The Pierre Capital Journal reports that the Fort Pierre Casey’s store is offering $300 signing bonuses and still isn’t up to full staff:
The labor shortage here and around the state continues to push employers to offer more pay, bonuses or both in the hopes of beating out competition for precious job applicants. In the search for cashiers and pizza makers, the Casey’s in Fort Pierre is offering a $300 signing bonus paid out after 30 and 90 days of employment.
Store Manager Pamela Leichtnam told the Capital Journal that her store is about three-quarters of the way to full staffing. The store has been offering a signing bonus for about a month, with the decision to do so coming down from the Casey’s corporate office in Ankeny, Iowa.
Leichtnam said the bonus offer has definitely helped jumpstart applications, as she had 10 on hand Monday morning versus two or three before the signing bonus was offered.
“It’s made a substantial difference,” Leichtnam said [Michael Woodel, “State’s Labor Woes Continue Despite Nixing Fed Unemployment,” Pierre Capital Journal, 2021.07.29].
Hmm… maybe if the state pushed for that 90% coronavirus vaccination rate we could have easily reached by July 4, we’d find more people willing and able to come back out to work those jobs with constant public exposure.