Businesses begged for employees during the summer of 2021, but for some, there was more money to be made by staying home.
Peter Ganong, an economist at the University of Chicago, found that 42 percent of unemployed workers made more money collecting benefits than their pre-unemployment wage. COVID-19 payments of $200 and more significantly padded unemployment insurance benefits. Some 7.5 million Americans have been collecting federal COVID-19 unemployment benefits due to the pandemic.
The labor force participation rate dropped from 63.3 percent in Jan. 2020 to 61.7 percent in July.
Since COVID-19 unemployment benefits expired in September, observers are waiting to see if jobs will soon be filled.
Goldman Sachs economist Joseph Briggs has predicted strong job growth with potentially 400,000 more jobs added in September as unemployment benefits expire. Hiring has already been picking up.
Still, a Bankrate survey found that half of the unemployed weren't seeking employment during the summer of 2021. Besides high value unemployment benefits, parents might have been waiting until schools reopened to avoid paying childcare expenses.
Bloomberg reports that rising childcare costs may have discouraged some from seeking employment.
Yet as students head back to school for in-person instruction, parents previously stuck at home watching kids may jump into the job market. If so, it'll be a welcome relief. The National Federation of Small Businesses reports that 49 percent of small businesses couldn't fill job openings in July, up from a historical average of 22 percent. Perhaps more worrisome, 93 percent of small business owners say they've received few or no qualified applicants for open positions.
In response, wages are trending upwards, with a seasonally adjusted 38 percent of small business owners raising compensation in July and a net 27 percent planning to raise compensation within the next three months.
