money Health fears may be holding workers back more than unemployment benefits
COVID concerns and restrictions are more likely to keep out-of-work Americans from looking for a job than the enhanced unemployment benefits, according to two separate studies.
“The virus fear is still the main impediment to the economy returning to full strength,” Oren Klachkin, lead U.S. economist at Oxford Economics, told Yahoo Money. “The unemployment benefits, the childcare issues, and retirements are all factors, but I would attach less weight to them.”
A new analysis by Oxford Economics found that the loosening of state restrictions after COVID-19 cases came under control to an 18% decline in weekly initial jobless on a median basis the following month. Those states that lifted restrictions faster saw claims fall more.
For example, Texas, which rescinded restrictions in early March, saw its initial jobless claims fall 65% from March to May while in New York — where its reopening was slower — initial jobless claims declined 50% for the same time.
A separate survey found that health conditions similarly motivated job seekers.
Covid fear was the top factor jobless workers weren’t urgently searching for jobs, with 23% citing that reason, according to a recent survey of 5,000 people by Indeed. Only 9.5% of the surveyed cited unemployment benefits as the reason they weren’t urgently job hunting.
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Covid fears and unemployment are “both factors there, at least on the urgency side,” Nick Bunker, director of research at Indeed, told Yahoo Money. “But COVID seems to be, at least according to those job seekers, the bigger factor.”
‘People would rather return to work’
Other factors were a bigger deterrent to finding a job than unemployment benefits. Covid fears, an employed spouse, having a financial cushion, and care responsibilities all ranked higher, according to Indeed.
One reason why unemployment benefits are less likely to discourage workers from accepting a job is because the value of a job outweighs the current value of those benefits, according to the Oxford Economics analysis.
A worker needs to receive between $1,600 and $3,200 per week in benefits — depending on the state — to persuade them to stay unemployed. That’s far more than what most out-of-work Americans are getting now.
A job, on the other hand, also provides many advantages that unemployment benefits don’t. It’s easier to move up or find a new, better job if employed. Workers who have a job also maintain their professional network. Last, there is no expiration date on jobs like with unemployment benefits.
“People would rather return to work, have the benefit of permanent income, reduce the risk of not losing that benefit,” Klachkin said, “versus relying on a fairly large, but not permanent check coming to them every week.”
‘That disincentive is fairly small’
Twenty-four states have eliminated certain expanded unemployment programs earlier than the federal expiration on September 6. Arizona plans to cancel benefits Saturday, and Maryland is set to follow on July 10.
Governors of many of those states cited worker shortage concerns — especially in industries like leisure and hospitality — for their decisions to end the unemployment programs early. Still, leisure and hospitality added 343,000 jobs in June — most of any sector for the month — but remains 2.2 million jobs short of its pre-pandemic levels, according to the latest data by the Labor Department.
More workers without a college degree — who are more likely to work in those industries and receive lower wages — cited COVID fears for not urgently searching for a job than those with degrees. They were also more likely to cite unemployment benefits than their college-educated counterparts.
“There is a bigger disincentive to find work among low-wage workers,” Klachkin said. “But that disincentive is fairly small.”
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
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