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Will the End of Federal Aid Improve Unemployment Numbers?

Federally-assisted unemployment benefits, an extra $300 a week, are set to expire on Sept. 6 and many experts aren’t sure that the end in boosted pay will get people back to work.

(TNS) — Extra federal unemployment benefits are set to expire Sept.6 as jobless rates in many states, including California, stay high.

Some employment watchers have predicted the unemployment rate will drop when the benefits — an extra $300 a week in most cases — expire. The theory is people can make more or about the same not working, so there is no incentive to work.

Some analysts, such as MIT economist Esther Duflo, have argued it isn't that simple: Workers' priorities have changed, many have child care responsibilities and requirements to return to work at in-person jobs are not appealing with rising COVID-19 cases.

Q: Will unemployment numbers improve when federal enhanced benefits end Sept. 6?

Phil Blair, Manpower

YES: When unemployment ends and supplemental payments end we will find millions of Americans motivated to accept the jobs they have been offered for the last three months. Suddenly a solution to daycare will appear and fear of catching COVID-19 will diminish. Our workplaces are safe and getting safer with growing demands for all employees to be vaccinated or not allowed to work. It is common sense to get vaccinated to keep yourself, your family and all others safe, at the workplace .

Gary London, London Moeder Advisors

NO: The end of benefits is only part of a complex employment drama. The COVID-19 spike continues to influence the economy, and that probably matters more, as parents remain stymied with the dilemma of whether to send their children back to school, and they go back to work. I also believe that in San Diego the complexity of crossing into San Diego to work continues to present a problem. Stay-at-home tech contractors may also be skewing the numbers.

Bob Rauch, R.A. Rauch & Associates

YES: Unemployment has been running higher in states where the $300 unemployment bonus is still in place. In states where the bonus has already been eliminated, unemployment levels are similar to pre-pandemic times. In the lodging sector, the employee shortage occurred during peak summer months before the delta variant began to hurt the travel sector. The lodging sector will not likely be quick to rehire until corporate travel returns.

Austin Neudecker, Weave Growth

YES:If the aggregate economy continues to grow, I anticipate more people will eventually return to work. However, the pandemic forced many to reflect on their work-life situation. Record numbers are predicted to switch to jobs to better fit their needs. The industries that have struggled to hire are likely to remain impacted until they address the underlying issues that make them less attractive options (underpay, lack of benefits, etc.).

James Hamilton, UC San Diego

YES:The extra benefits were necessary when they were first implemented. But now's the time to return to the limits on assistance that we had in place historically. The states where the unemployment rate has been slowest to come down are the states where people get paid the most not to work. Even if your old job still isn't available, other opportunities are out there now for anyone who is willing to take advantage of them.

Chris Van Gorder, Scripps Health

YES: There is no question but that some people have stayed away from work and not sought employment due to these generous government support programs. That has put pressure on restaurants, hotels and other businesses, including health care and hospitals. Sunset of these programs will bring more individuals back to the workplace. However, noneconomic factors like childcare challenges, job burnout and concerns about the virus still may keep some people out of the workforce.

Norm Miller, University of San Diego

YES:Many will return to work when the benefits of working, net of transit costs and child care costs, exceed the net from not working. If the child care centers do not fully open, that will delay the ability of some parents to return to work. Currently, jobs are plentiful and increasing the confidence of those receiving benefits, but there will be a rush to look for work as benefits expire, so I'd suggest looking sooner to increase the choices available.

Jamie Moraga, IntelliSolutions

YES:It should help but there's uncertainty on how much of significant impact it will have. Recent economic studies for states that have already cut federal enhanced unemployment benefits haven't seen an increased return to work that they anticipated. Continued healthcare concerns, childcare/eldercare needs, career/lifestyle changes, and retirements remain significant factors. Some workers are also being more highly selective before re-entering the workforce by taking the time to find the "right opportunity" or seeking out positions that allow work from home. The pandemic has changed the dynamics of our workforce and it isn't as simple as eliminating enhanced federal benefits.

David Ely, San Diego State University

YES:But the impact is likely to be very modest. Factors beyond enhanced unemployment benefits are discouraging individuals from seeking or accepting jobs. These include remaining concern over contracting COVID-19 and the need to provide childcare. Workers may also be slow to return to the labor force because they are in the process of shifting careers. Some of the improvement in unemployment numbers that we may observe will be due to a strengthening economy.

Ray Major, SANDAG

YES: A significant number of people have remained out of the workforce because of the generous government programs instituted during the COVID-19 crisis. As the subsidies end, this segment of the population will find its way back into the workforce. And when it does, people will be pleasantly surprised by the number of jobs available, and the substantial increases in wages being offered by eager employers. As people re-enter the workforce, the unemployment rate will fall.

Lynn Reaser, Point Loma Nazarene University

YES: Ending of extra jobless pay should encourage more of the 8.7 million people unemployed to accept one of the 10.1 million jobs standing unfilled. Expiration of rent eviction moratoriums on Oct. 3 may provide additional urgency. School reopenings and new child tax credits should help more people accept jobs. Companies are offering higher wages, benefits and signing bonuses to attract workers. More people may enter the labor force, but even more should find jobs.

Reginald Jones, Jacobs Center for Neighborhood Innovation

YES: While unemployment numbers are likely to improve, don't expect a rapid change. COVID-19 created several issues slowing workers' return. Among them are health concerns and domestic factors— particularly childcare and its related expense. Perhaps more critical is the increased awareness of wage and benefit deficits. It is urgent to institute family-supporting wages based on area cost of living to stabilize the post-pandemic labor force, especially in the low-paying sectors.

Kelly Cunningham, San Diego Institute for Economic Research

YES:Those waiting to find employment after enhanced federal benefits end will foreseeably have more difficulty since many jobs will have already been filled. The rising generation of younger, less skilled workers, not previously qualifying for unemployment compensation, are already taking on many entry-level positions. Older, more experienced workers have hopefully spent time during the pandemic layoff reassessing career goals, utilizing online education to improve their skills, and eventually find and qualify for higher paid work.

©2021 The San Diego Union-Tribune. Distributed by Tribune Content Agency, LLC.

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