Over the past year and a half there has been consistent controversy over how to handle the unemployment that surged with the lockdown. Originally this was expected to be a very short period–people were not really being laid off, these were just furloughs and everybody would be back to their old jobs in a month or two. That obviously didn’t happen. At that point the intent was to shield those who had been rendered unemployed by the government imposed lockdowns along with trying to assist those businesses affected by the orders. Almost 17 months later the additional aid is expiring and the question is whether the 7 to 9 million people receiving that support will return to work.
There are several reasons that people have not taken the jobs that have been on offer over the last year (10.3 million of them). Obviously there have been those that have preferred to live on the extra government support that has been on offer but there have been other motivations. There are those that have been taking care of sick and elderly relatives or have been staying home to care for kids that are not back in school. There are those that have been afraid to resume work for fear of the virus. The number one reason that many have remained out of work is that they lack the skills, education or experience to take the jobs on offer. How many of those that lose their extended benefits will return to work after September 6? Estimates are that about a third will be able to find a new job quickly. How much will this influx of new workers help alleviate the labor shortage problem? Not much.
In the last several months there have been 25 states that opted out of the programs that provided that extra unemployment aid. If there was going to be a surge of people resuming employment one would expect to have seen it with these states. There is little evidence of that surge. Some people were able to resume their old jobs provided these businesses were able to resume operations but the shutdown caused 90,000 restaurants to close, thousands of businesses dedicated to hospitality shuttered, entertainment facilities closed and so on. Many had no jobs to return to. The companies that need trained people were not seeing them and these companies have been unable to do the bulk of their own training.
In the weeks to come there will be millions seeking jobs again. This will make a difference for those that have been struggling to fill those basic service positions but there will be little relief for those sectors that have been facing labor shortages for years. The problem has been acute for manufacturing, construction, transportation, health care and even the professions. The new factor that has affected the service sector job is automation and technology. As employers have struggled to find workers and as wages have risen there has been a move towards using robotics and automation as an alternative–touch screens at fast food places, self-checkout, robots to handle warehouse work etc. This further limits the opportunity to find those lower skilled service jobs.