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By September 4-6, 2021 around 7.5 million Americans will lose all unemployment benefits that they have been relying on during the COVID-19 pandemic. It is assumed by some that the additional unemployment benefits are affecting the economy negatively by holding back qualified candidates that are willing to work who are just living off the benefits. However, many do not realize that workers who have already been hit hard by the pandemic will be hit harder by the loss of unemployment benefits. Despite the benefits, job growth is robustly bouncing back with more than 850,000 jobs being added in June 2021. I have outlined some ways that this new cutoff will affect the job market and workers in the coming months.

Workers of Color Disproportionately Affected

Workers of color, especially those in frontline industries, were hit hard by the COVID-19 labor market crisis and are still struggling. The current unemployment rate for Black workers is 9.2 percent, which is twice as high as the white unemployment rate of 5.2 percent. Additionally, Asian workers have a 5.8 percent unemployment rate with Latinx workers at 7.4 percent.

As pointed out by Dr. Bill Spriggs in the New York Times the delay in hiring is not an issue of education or active searching for work but rather the continued reality that Black workers are typically first fired and last hired. The loss of unemployment means that these workers won’t have access to financial assistance to carry them to reemployment which could hurt them even more. Especially, while they look for work focused on what they are experienced in instead of taking a lower pay and benefit job in time of a crisis.

Women & Caregivers Will Lose Support

During the pandemic, Congress took action to ensure that caregivers who lost their jobs due to taking care of children or family would receive assistance. The caregiver challenge led to more than 1.79 million women dropping out of the labor force during the COVID-19 pandemic. Since many women left work by choice, they are not eligible for traditional state unemployment benefits and will not receive benefits after September 6 while continuing looking for work, if they are able to. This provides another underrepresented group that will not have access to financial assistance and may not have the time either to look for work while being a caregiver.

People Still Won’t Work

The $600 unemployment booster isn’t the primary reason that people are not working so taking it away will not necessarily bring about a rush of 7.5 million people looking for work. Recent Yale research found that unemployed people returned to their previous jobs at similar rates. The research found that the scarcity of job opportunities rather than labor supply was a main factor in employment during the pandemic. Additionally, research from the Chicago Federal Reserve found that when individuals stop receiving their unemployment benefits they are less likely to continue to look for work than those who are still receiving benefits. This is because those currently collecting benefits search twice as intensely as those who have exhausted their benefits and are feeling discouraged. While people may not be receiving benefits an influx of job seekers may still not hit the market especially if job opportunities for their field are still scarce.

Ernie Tedeschi, a former Treasury Department official and an economist at Evercore ISI Research, has noted that if the $600 unemployment booster is not extended through 2021, it will cost the economy 2 percent in gross domestic product growth and there would be 1.7 million fewer jobs. This rings true when looking at some states who have cut off unemployment earlier than the September date. Six of the states who decided to cut off unemployment early still had unemployment rates in June that were above the national average. States that ended it in June saw the same pace of hiring as those states who continued to keep the benefits going. This showed that ending unemployment early did not necessarily provide better economic conditions.

Quality of Diversity of Job Openings is Limited

As the United States started to open again in Spring of 2021 the jobs added into the market have been restaurants and other service sector businesses with lower wages and limited benefits. The Economic Policy Institutes’ Elise Gould found that the accommodation and food services sector has more job openings than there are workers that were laid off in that sector. On the flipside, higher waged sectors have more unemployed workers than job openings, including real estate, information, education, and arts and entertainment. The goal of the unemployment benefits was to provide people the opportunity to search for a suitable job with comparable wage rather than be forced into a job that may not utilize their skills or provide any career paths. Benefits are still very important since many people are concerned about contracting COVID-19 especially when heading back to the workforce with the new Delta variant and increasing COVID-19 numbers across the United States.

Look Ahead for Employers & Hiring

Employers who are hiring may find the current talent pool looks a bit different especially depending on the type of job. Now is a good time to review current and potential openings and to look closely at the requirements of each, evaluating if they are needed for success in the position.

Something to keep in mind while evaluating candidates is that 84% of HR managers reported that their company is open to hiring an employee whose skills can be developed through training.

This is important to note as 42% of resumes companies receive are from candidates who don’t meet skills requirements. Also, looking at younger workers as well since many did not qualify for the assistance can be helpful while they may not be as qualified the unemployment rate of teens is at its lowest level since the 1950s according to the Bureau of Labor Statistics. Additionally, employers are encouraged to look to ensure they have the right disposition codes in place as well as look to utilize unconscious bias tools in recruitment to ensure candidates are moving through the pipeline based on qualifications.

Looking to see how employment will continue to change in 2022 with the Delta variant and economy? Join us October 21, 2021 for our webinar, What’s Ahead: 2022 Job Market Outlook, that can provide you with complimentary HRCI and SHRM recertification. Register today.

Author

Katie Saba
Product Marketing Manager
Circa
Katie Saba is a Product Marketing Manager at Circa. Based on her conversations and research, Katie produces webinars and writes articles on diversity and other employment-related topics to guide employers, employees and job seekers in their professional endeavors.

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