It’s safe to say we live in unprecedented times. A global pandemic, shocks to the supply chain, and myriad other disruptions make this a challenging time to be in business. The goal of The Future of Attracting and Retaining Workforce blog series from DEED’s Workforce Strategy Consultant team is to lay out information to help businesses overcome obstacles and find success. This first blog in our series will focus on enhanced unemployment benefits and what might happen next.
What are enhanced unemployment benefits?
There are three different federal enhanced unemployment benefits programs with very similar acronyms. One is Pandemic Unemployment compensation, or PUC. This is the extra $300. The other is the Pandemic Emergency Unemployment Compensation, or PEUC. This is the extension of benefits so a person can receive assistance longer while continuing a job search. The last is the Pandemic Unemployment Assistance program, called the PUA, which offers benefits to those usually not eligible for unemployment benefits, like self-employed people, freelancers or gig workers.
Under the American Rescue Plan, the extra $300 a week benefit is set to expire September 6th. That means that the last week for which people can be paid enhanced benefits is the week of August 29 through September 4.
What happens next? Will there be lots of job seekers soon?
This is the big question that everyone is asking, and the truth is we don’t know. Ron Wirtz, the Director of Regional Outreach at the Federal Reserve Bank of Minneapolis said it best.
“It’s safe to say that enhanced unemployment benefits are affecting some workers. How many, I think that’s a really important question that I don’t think we know the answer to,” said Wirtz “I think I’m pretty safe to say it’s likely more than those claiming that it has no effect. And I think it’s likely less than those who believe that the pandemic-era unemployment [benefits are] the only reason why people aren’t working now.”
Multiple organizations we’ve spoken to have pinned all their hopes on multiple applicants returning to the workforce in September – a “return to normal”. But for the last several years pre-pandemic, during “normal” times, we were also in a labor force crunch. Let’s take a look at some numbers to illustrate.
Jobseekers per vacancy is a fantastic tool developed by our Labor Market Information (LMI) team here at DEED. It compares the number of job vacancies to the number of unemployed workers, and you can see back in 2018-2019 we had fewer job seekers than jobs. It was almost at one job seeker for every two jobs. This tool doesn’t consider other elements, like skills the employees would need or degrees, so for some types of jobs this number would be far lower.
So, if hiring was difficult before the pandemic, why does it feel harder now? There are many factors at play including continued concerns over contracting COVID-19, childcare challenges, retirements of older workers, the temporary status of many layoffs, mismatches between people looking for work and the types of jobs available, and the cushion that the enhanced benefits allowed workers to wait and find a job that is the best fit for them. Another key component in current hiring challenges is so many industries hiring at the same time. Usually this hiring would be spread out more, but during the rapid economic rebound it happened all at once. Restaurants are one example. Once in-person dining restrictions were lifted, many restaurants were trying to hire additional staff at basically the same time, creating huge demand for employees with the right experience and skillset. However not all of these workers were able to come back right away.
Let’s take a look at another chart.
This is another great chart developed by our LMI team, this time showing the labor force, employment and unemployment rate. For the unemployment rate, you can see pre-pandemic we were at 3.3%. Last month, it was at 3.9%. You can also chart the recovery of both the labor force and employment after the pandemic. Importantly, as of June 2021, Minnesota’s labor force held 85,000 fewer workers than before the pandemic. That is 85,000 people not looking for work, despite what some consider to be a labor market that currently favors workers.
The best strategy is to plan for the worst outcome
So, what does a business do? Build strategies around a workforce shortage. If the labor force does develop some slack, that is a bonus for your organization but you and your company aren’t counting on it. You’ve already developed the plan to make yourself the employer of choice for your sector. There are tools and strategies that will help you find and retain the talent you need, along with resources available through DEED for upskilling and reskilling your current workforce. The next parts of the blog series focus on developing your plan and highlighting resources that may be available to you.
The Future of Attracting and Retaining Workforce blog series from the Workforce Strategy Consultant team:
- The End of Enhanced Unemployment Benefits: What You Need to Know - this blog post
- The Empowered Workforce: It’s More than a Paycheck
- Combating Burn Out: How to Re-energize Your Workforce
- The Art of Appreciation: Top 10 Ways to Show Your Employees You Care
- Opportunity Knocks: Recruiting the Motivated Career Changer
- Job Seekers with Options: Building A Culture of Opportunity
Monthly Workforce Wednesday webinars:
Join the Workforce Strategy Consultant team the first Wednesday of every month for our Workforce Wednesday webinar. This series of virtual meetings focuses on highlighting proven strategies to build talent pipelines, hearing and sharing best practices, and networking with other Minnesota employers about all things workforce. Find out more and register.
- More than Simple Supply and Demand - This article in the June 2021 issue of Minnesota Economic Trends examines why fewer people are looking for work and why employers need to reach out in new ways to find the talent they need
- Where Are the Job Seekers? - This article in the September 2020 issue of Minnesota Economic Trends explored the decline in those looking for work during the first part of the pandemic.
- Workforce Optimization Cycle blog series - This series offers resources for employers planning for economic recovery, from assessing business needs and developing workforce strategies to implementing plans and evaluating their success.