Though this should come as no surprise whatsoever, because today, people can get almost $3,700 each month in unemployment and other cash benefits without ever having to step foot into a job, and in many states, they can do so without even searching for one. Unemployment benefits pay almost double the median income in many towns and cities across the nation and about $10,000 more than the United States’s median income.
What has this led to? Small businesses fortunate enough to survive lockdowns are now greeted by a massive labor shortage. In fact, 73% of small-business owners report having difficulty hiring workers. Most have been required to turn away customers or missed other growth possibilities simply because they couldn’t find enough employees. What’s most striking? One in three say they’re likely to close within the next year if they cannot find enough workers.
The number of new jobless claims represents the number of people who filed for unemployment in the previous week. The new number was more than forecasters’ expectations of 359,000 new applications. The number is likewise higher than the week earlier, which examined 375,000 filings.
Weekly jobless applications are being followed closely as the U.S. economy recovers because recent monthly jobs reports have been less than stellar and have added to anxieties that the nation could be in the throes of a labor shortage.
The economy fell somewhat short of expectations last month and added 559,000 new jobs, a figure that was below the 650,000-consensus level though was still far more positive than the surprisingly bad report from the month before. Just 278,000 jobs were added in April, a number way below predictions of nearly 1 million additional jobs.
This week’s jobless claims report is likewise notable because it is the first after some states have started opting out of the federal government’s $300-per-week extended unemployment insurance program, which critics say has been holding back the labor force by incentivizing collection of the increased benefits.
Alaska, Iowa, Mississippi, and Missouri, which have a combined population of about 13 million, were the first states to end the benefits program prematurely last weekend. Roughly half of the states will be phasing out the program in the following weeks before its actual Sept. 6 sunset date. The increased benefits plus the average state benefits total over double the federal minimum wage on average.
While the exact impact that the expanded payments have had on the labor market is unclear, a recent inquiry by employment website Indeed found that job search activity rose, relative to the national trend, in the states opting out of the extended program. A state’s share of national clicks, on average, was up between 3% and 4% from the day of the announcement to three days later, the inquiry discovered.