Labor Day might have a new meaning

This past Labor Day, it is estimated that nearly 7 million people have lost all unemployment benefits while the federal eviction moratorium simultaneously expires.  An additional 3 million people are expected to lose a $300 weekly increase to their state unemployment benefits.  These benefits had previously been extended twice since their implementation.  “But this assistance has also emerged as a divisive flash point in a political debate over whether government assistance discourages people from returning to work.”[1]  As the debate rages on with the safety net pulled out, the Delta variant could mean new restrictions through the end of the year.

A scholarly study was conducted after 21 states pulled supplemental pandemic unemployment insurance benefits in June 2021.  At that time, the withdrawal impacted approximately 2 million people with total loss of benefits and a reduction to another 1 million.  Their research found:

These statistics support that the economic recovery is not enough to compensate for what was being supported by the unemployment benefits.

Even as August jobs data reported disappointing results, the current unemployment rate sits at 5.2%.  However, the unemployment rate in the hospitality industry is at 9.1% and this had been the sector showing the highest gains of 2021.  Retail also posted a loss confirming that consumers are staying put in their homes.  They are cancelling or postponing trips and not parting with any extra income on unnecessary purchases.

Professional services, transportation, warehousing, private education, and manufacturing all were able to show gains in the month.  “The previous two months saw substantial upward revisions, with July’s total now at 1.053 million, up from the original estimate of 943,000, while June was bumped up to 962,000 from 938,000. For the two months, revisions added 134,000 to the initial counts.  Also, wages continued to accelerate, rising 4.3% on a year-over-year basis and 0.6% on a monthly basis. Estimates had been for 4% and 0.3% respectively.”[2]  One key factor limiting economic recovery is not lack of jobs, but safety concerns related to the pandemic combined with limited family-care options.

[1] https://www.washingtonpost.com/business/2021/09/05/unemployment-benefits-economy/

[2] https://www.cnbc.com/2021/09/03/jobs-report-august-2021.html

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