HARRISBURG — The end to the federal boost to unemployment benefits in the commonwealth should translate into more people returning to work, business leaders said.
How much of a dent that makes in the worker shortage crisis facing many business owners across the state isn’t clear though, they said.
Twenty-six states, mostly in the South with Republican governors, stopped providing the unemployment boost — an extra $300 a week in unemployment benefits, a program to aid gig workers and self-employed workers, and a program that offered an extra 13 weeks of benefits after normal benefits expired — earlier this summer. Pennsylvania was one of the states that continued to offer the federal unemployment boost.
State Rep. Brad Roae, R-Crawford County, the chairman of the House Commerce Committee, said that it’s clear that states that already ended the unemployment boosts saw more people get back to work more quickly.
“Once the $300 extra goes away, many people will get back to work and the unemployment rate in Pa. will go down substantially,” he said.
Alex Halper, director of government affairs for the Pennsylvania Chamber of Business and Industry, said that the U.S. Chamber conducted a survey in May of workers who’d lost their jobs during the pandemic to find out their attributes about going back to work. That survey found that 61 percent said they were “in no hurry” to get back to work, Halper said.
“So the data backs up the anecdotal feedback that we’re hearing from employers, and it’s a factor in all industries and every region of Pennsylvania,” he said. “We do believe the federal benefit enhancement program eventually became a disincentive for some to transition back to employment. We expect the phase-down of the program to encourage employment, which will hopefully be reflected in our unemployment rate.”
— but much more needs to be done to address workforce challenges and improve Pennsylvania’s competitiveness.”
Pennsylvania’s unemployment rate has continued to drop from its pandemic highs, but the state’s unemployment rate remains higher than the national average.
In July, the unemployment rate in Pennsylvania was at 6.6 percent, compared to the national average of 5.4 percent.
Among neighboring state’s only New York, with an unemployment of 7.6 percent, and New Jersey, with an unemployment rate of 7.3 percent, had higher unemployment rates than Pennsylvania in July, the most recent month for which data was available.
West Virginia’s unemployment rate in July was 5 percent; Ohio’s stood at 5.4 percent; Delaware’s, 5.6 percent and Maryland’s 6 percent.
West Virginia, Ohio and Maryland were among the states that stopped offering the federal boost in unemployment benefits earlier this summer.
Greg Moreland, senior state director for the National Federation of Independent Businesses in Pennsylvania, said that group’s surveys show that 49 percent of small business reports that they have important job openings they can’t fill.
“This is a 48-year record high,” Moreland said. “NFIB has never recorded a reading like this in 48 years, the historical average is 22 percent.”
Moreland said that while the hospitality industry has gotten much of the attention for the struggles restaurants and bars have had in finding staff, the issue is straining employers in many industry sectors.
Moreland said that 61 percent of small business owners in the construction industry report that they have job openings, while 60 percent of manufacturing businesses say they have openings.
State Rep. John Galloway, D-Bucks County, the minority chair of the Commerce Committee said that all lawmakers are hearing reports about the worker shortage. But he said history suggests the way to resolve the crisis is to improve working conditions or offer better benefits. Labor shortages helped inspire the move to a 40-hour workweek and overtime pay requirements.
“The onus is going to have to be on business. They’re gonna have to create incentives to get people back,” Galloway said.
Moreland said many businesses have increased pay and are still struggling to find workers.
In addition, 38 percent of business owners say they’ve raised worker pay to keep people and 27 percent said they plan to raise worker pay in the next three months, he said.
Changes in the labor force
The unemployment rate isn’t the only worrying data point. The state’s labor force — the number of people seeking work and the number employed — remains lower than it was before the pandemic, state data shows.
In July, there were 414,000 Pennsylvanians considered unemployed, down from 433,000 in June and down from 839,000 in July 2020.
There were 309,000 Pennsylvanians considered unemployed in February 2020, just before the COVID pandemic hit, prompting statewide business shutdowns and mitigation efforts that crippled many industries.
But in February 2020, there were 6.25 million people working in Pennsylvania and in July, there were just 5.89 million people employed in the state, meaning that in addition to the 414,000 people considered unemployed, there are about 250,000 people who were working before the pandemic who aren’t even trying to work anymore.
Secretary of Labor and Industry Jennifer Berrier on Monday said that factors like access to child care or the need for training make it difficult for some people to get back to work.
In addition, as Pennsylvania’s population continues to skew older, some of the people who’ve left the labor force and are no longer seeking work are retirees, said Sarah DeSantis, a Labor and Industry spokeswoman.
There is no data that suggests many of the people who’ve left the labor force did so out of frustration over finding a suitable job, said Edward Legge, director of the Center for Workforce Information and Analysis at the Department of Labor and Industry.
“Unfortunately, however, we do not have data that can definitively tell us much about the other potential reasons a person might leave the labor force,” he said.
There are a variety of likely explanations for why some of those thousands of workers have remained off the job and aren’t actively looking for work, he said.
That could include fear about being exposed to COVID on the job, he said.
“During periods of economic improvement, people leave the labor force because they may no longer feel they need employment if another family member is making sufficient salary,” Legge said. Others may not be looking for work because they’ve enrolled in training programs or are otherwise furthering their education, he said.