Outside the Box: What it will take to get a durable recovery in the job market

COVID-19 case numbers are declining, and it would be easy to assume that summer will bring a predictable economic boom time, with growth shared widely. 

It’s time to make dedicated investments in the policies and programs that help people go to work: child care and education, proactive efforts to make sure all communities are vaccinated against COVID-19, public transportation to and from jobs, and yes—unemployment insurance. 

That last one may be counterintuitive, but research shows that unemployment insurance recipients look harder for jobs and end up better-matched to the jobs that they take, raising productivity and wages. This will ultimately make for a stronger economy, thanks to the cumulative effects of more stable employment. For every dollar spent on unemployment insurance, $1.61 returns to the economy—one of the highest rates of return of any benefit or program. 

Republicans and Democrats both support spending on America’s infrastructure, but an agreement on a bill is still a long way from coalescing. WSJ’s Gerald F. Seib explains why skepticism is growing on both sides about whether the two can come together on this topic. Photo illustration: Ang Li

Different experiences

Crucially, communities’ experiences of the economic downturn have differed significantly: last month, the Black unemployment rate was 9.7%, much higher than the overall national rate. 

Over 2 million fewer Americans over 55 have jobs than pre-pandemic, and the unemployment rate for this group is double what it was in a healthy economy.

A full recovery is a long way off: the economy is still 8 million jobs short of March 2020—and 11 million jobs short of where growth would have led by now without the pandemic recession. Growth is happening at different rates in different parts of the country and in different industries.

Are unemployment insurance benefits slowing hiring? The data don’t say so: faster job growth over the past few months has come in states with higher unemployment insurance and in industries that pay low wages, where unemployment insurance benefits could be higher than typical wages. Unemployment insurance doesn’t keep people out of the labor market—it helps the unemployed make ends meet until they find a job that’s a good fit. 

Ending enhanced unemployment benefits alone won’t get people back to work, SF Fed research suggests

Obstacles to work

Instead, it’s likely that logistical hurdles are making it more difficult for people to work—and those won’t be resolved overnight. Child care, transportation, and the pace of vaccination all stand in the way of a booming labor market—and so do the 8 million fewer jobs than existed in March 2020. 

Even before the pandemic, the lack of access to affordable child-care options caused more than 2 million parents of young children every year to quit a job, not take a job, or greatly change their job. 

Joya Misra: Child care costs 14% of middle-class families’ income—Biden wants to cap it at 7%

For example, even schools that are nominally in-person may have fewer before- and after-care options. Many summer camps are operating at lower capacity while others have closed. Parents may have decided that their kids have adjusted to virtual school and may not want to change their arrangement this late in the school year, and some may feel cautious about children with health conditions returning to in-person school. 

People trying to return to work may also be having trouble finding transportation to and from work, especially if they work evenings or nights. 

And in only a few weeks, schools will let out for the summer, and families will have to come up with new arrangements for kids, with fewer options than usual for camps and in-person activities. 

And at the very least, those who plan to look for a new job may need a few weeks before it’s safe for them to do so: working-age adults nationwide didn’t have widespread access to vaccines until the end of April and half the country isn’t vaccinated yet. If it took someone a few weeks to find an appointment, it could be well into June before they’ve had time for both shots and the necessary waiting period for full vaccine protection. Without access to paid family or medical leave, many people would have to quit their jobs if they or their family got sick. 

Some hit harder than others

The responsibilities and challenges that keep people out of the workforce aren’t distributed evenly: women are much more likely to change their hours or job to adjust to family needs, particularly care needs. This shows up in the employment data, which demonstrate that job gains have been concentrated among men in the past few months of recovery. 

Unemployment insurance isn’t the reason people will stay home, but it might buy them time to find a job aligned with their education or interests, to make arrangements for the care of family members, and wait the up-to-six weeks it takes for some vaccine courses to be fully effective after their doses. 

Families have made huge adjustments over the past year to contend with the pandemic, and while some can’t wait to get back to normal, others may have more challenges readjusting yet again after 15 months of unpredictability. 

All of these adjustments stem from the economy’s pre-existing conditions: child care was already expensive and often not available at all, many people lacked reliable transportation, and low wages in the service sector gave families little cushion. These problems were exacerbated by the pandemic, and they point to the need for the American Families Plan, a proposal to eliminate barriers to participating in the labor market. 

It’s still an uncertain time, and people’s lives can’t just be flipped from “not working” to “working” overnight. For a strong recovery that benefits everyone who’s looking for a job, purposeful investments in care, education, and vaccine access will need to accompany the creation of millions of jobs. 

Lily Roberts is the managing director of economic policy at the Center for American Progress

Hayley Brown: Ripping away enhanced unemployment benefits will disproportionately harm working-class moms

Patricia Anderson & Phillip Levine: How to fix the unemployment system to time extra benefits so they are just the right size to help workers and the economy

Rob Portman writing in Barron’s: It’s Time to Stop Paying Americans to Stay Home

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May 29, 2021 at 03:00AM
Lily Roberts
http://www.marketwatch.com/news/story.asp?guid=%7B20C05575-04D4-B545-7464-0C44219663C3%7D&siteid=rss&rss=1