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Worker Shortage Has Many Causes

Tracy Davenport Tracy Davenport
6th July 2021
Worker Shortage Has Many Causes
Unemployment has been higher post-pandemic (Getty Images).

The Claim

Unemployment benefits are causing worker shortages.

Emerging story

Some are claiming that extended unemployment benefits are causing worker shortages in the U.S. 

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Misbar’s Analysis

Misbar discovered that as of June 2021, approximately 61% of eligible Americans were participating in the workforce. This is about 2% lower than the number of those participating before the COVID-19 pandemic. This limited supply of workers has employers worried, and some are blaming extended unemployment benefits for the reduced numbers of workers willing to work. 

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However, some believe the decrease in workforce participation is more complicated than only looking at unemployment benefits. In a study conducted by The Federal Reserve Bank of San Francisco, it was found that only a small fraction of workers would turn down an offer to return to work at their previous wage under the expanded unemployment payments.

Other experts are also uncertain that the decrease in employment participation can be blamed solely on the expanded unemployment benefits. 

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Many states have stopped paying the extra benefits, believing that they were the reason for keeping people out of the workforce. However, in the states where benefits have been discontinued, job searches have not picked up according to BusinessInsider.org. A report from Indeed.com also shows the same; employment experts interpret that to mean that unemployment benefits are not holding people back. 

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According to the report, “It is unclear why search activity is below the baseline in states where federal UI benefits have ended. If overly generous federal UI benefits were holding back job seekers, then we would expect search activity to increase, relative to the national trend, in states where those benefits have ended.”

Coronavirus concerns, childcare issues, and not wanting to give up a remote workplace have also been reasons given for worker hesitancy to return to the workplace. Others have expressed “their work searches are not yielding job opportunities which would allow them to cover their cost of living.”

Misbar’s Classification


Misbar’s Sources

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