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As pandemic eases, unemployment picture isn’t so simple yet

A disappointing national jobs report has sparked debate over whether enhanced unemployment benefits remain appropriate.

Are extended benefits a disincentive to return to work? Or are businesses not offering competitive enough wages to attract employees?

The economic picture is likely not as simple as either of the questions being debated by the public.

More than 20 states, including West Virginia, have announced plans to halt federally-approved enhanced unemployment benefits for millions.

But as the country recovers from the multifaceted effects of a pandemic, it’s best not to overreact to what a single month indicates, said Brian Lego, economic forecaster with the Bureau of Business and Economic Research at West Virginia University.

“People trying to draw firm conclusions at this point in time from one side or another are just overplaying their hand. There needs to be some stepping back and understanding this is a really unique time we’re living through. What’s happening is still happening,” Lego said.

In other words, the economic recovery needs more time to play out. And while we’re in the middle of it, it’s challenging to consider the relatively small sample sizes of data in real time.

“The pandemic, a lot of turmoil has been created by it,” Lego said in a telephone interview this week.

“You can list all those things, whether it’s the wage rate that’s being offered, the unemployment insurance benefits, the lingering impact of still being in the pandemic – and people’s psychologies have been affected to a significant degree.”

‘We need you back to work’

The current debate began when a disappointing jobs report for the month of April showed just 266,000 jobs added by the U.S. economy. That was a steep drop-off from the 770,000 jobs added across the nation the prior month.

The report by the Bureau of Labor Statistics noted job gains in leisure and hospitality.

The bureau reported that the number of people jobless 15 to 26 weeks declined by 188,000 to 1.2 million.

The number of long-term unemployed (27 weeks or more) at 4.2 million was essentially unchanged from the prior month. But that number remained far higher — 3.1 million higher — than pre-pandemic in February, 2020.

The April report showed that 9.4 million people reported that they had been unable to work because their employer closed or lost business because of the pandemic. That was down from 11.4 million the prior month.

In West Virginia, the total number of unemployed state residents decreased by 1,500 to 45,800. Total employment in West Virginia was up 1,700 over the month.

More than 20 states have now announced plans to opt out of unemployment programs meant to soften the blow of the pandemic.

One of those is West Virginia, where Gov. Jim Justice has said he feels for residents who are still struggling while saying he wants to provide extra motivation to look for work.

“I’m not talking to someone who is out there really struggling, really trying to get back to work. I am not talking to that person,” Justice said.

“I am talking to the people out there who have decided to be able to take the bonuses from the federal government and to just ride along. I think you need to be back to work. We need you back to work. Our small businesses depend on you so badly it’s unbelievable.”

Justice announced a policy change that would affect both categories of people equally. The state will end enhanced pandemic unemployment benefits at midnight June 19, just before West Virginia Day.

His decision will halt an additional $300 payment to unemployment compensation recipients, stop benefits for self-employed or part-time workers who wouldn’t usually qualify, end an extension of benefits for people whose regular benefits have exhausted, and stop an additional $100 benefit for certain people with mixed earnings.

As passed by Congress, those benefits would have continued until September.

Even as things already stood, next month West Virginia is set to reinstitute a requirement for unemployment claimants to seek actively seek employment.

At a briefing this week, the governor said “in this situation, people need to get back to work.”

Local unemployment observations

Last Friday, the same day Justice announced the change, dozens of members of the state Legislature’s Republican majority signed a letter to the governor requesting that he act urgently to begin transitioning away from the enhanced unemployment benefits at the start of next month.

Austin Haynes

“The extra unemployment benefits were needed last year when there was so much uncertainty about everything,” said Delegate Austin Haynes, R-Fayette, whose name appears first on the letter.

“But now we are beginning to re-open and businesses can’t find enough people to work. We either incentivize folks to get back to work, or we risk losing more businesses. The choice is clear, concise, and simple.”

Steve Westfall

Another delegate, Republican Steve Westfall of Jackson County, called MetroNews’ “Talkline” this week to describe his view of how the continued benefits are affecting local businesses. He described restaurants struggling to fill open positions.

“Here in Jackson County, about everybody’s got help wanted signs up. So we need people to work. And I just don’t think we need to keep paying them to stay home and play video games,” Westfall said.

Kayla Young

Delegate Kayla Young, D-Kanawha, who appeared on the same episode of “Talkline,” said it’s not that simple. She disagreed with the governor’s decision.

“I don’t think it’s very nice. It sounds like he thinks people are just sitting around not working because they don’t want to, and I don’t think that’s the case,” Young said.

“I think there’s a lot of different things going on. A lot of people’s jobs aren’t back all the way. We’re still down about 30,000 jobs so a lot of people just can’t to back to work. We also have folks who don’t have childcare, they have health concerns and they can’t go back right now.”

Speaking today on “580 WCHS”, Delegate Mike Pushkin said jobs may be hard to land right now for some skilled workers.

Mike Pushkin

“Some of them, their industry has gone away. There are several places around here that have not reopened. And I’m not talking about restaurants either,” said Pushkin, D-Kanawha.

“I’m talking about people who have degrees in a specialized field. They’re out looking for work. That 300 dollars might be covering their childcare while they go out looking for work. I wish there was a magic bullet to address the labor shortage in certain industries. But what the governor and the Republicans have proposed is not going to work.”

Time will provide more clarity about the actual condition of employment in West Virginia and across the nation, said Lego, the economist from WVU.

“We’re in a very unique situation,” he said. “We’ve had massive displacement in a lot of industries. You have a lot of ongoing public health concerns for workers and for businesses. So it becomes a pretty hard pull, in my estimation, to make any kind of ultimate judgment as to which factor is responsible for the lack of strong jobs growth that we saw in this particular jobs report last month.”

The unprecedented effects of the pandemic — and the nation’s financial response — have made the situation challenging to judge in the moment, he said.

“We’re kind of playing this thing out in real time, and people are trying to draw conclusions based on one month of data,” Lego said. “That’s a pretty large departure from what we’ve seen in economic history.”





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