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When Unemployment Begets Unemployment

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When Unemployment Begets Unemployment

National Review Online October 13, 2021

The unprecedented surge in unemployment benefits and other government-transfer programs during COVID-19 is showing increasing signs of long-term economic impacts.

The September jobs report released last week showed that hiring had slowed to a crawl as labor supply continued to hold back the recovery. The economy added just 194,000 jobs in September, with the leisure and hospitality sector — hardest hit by the pandemic and most affected by labor shortages — adding only 74,000 jobs. Both the overall gains and the gains in this sector were less than a quarter of the pace of hiring over the summer.

Since at least the spring of this year, it has been clear that employers are having difficulty finding workers to hire, despite strong demand for labor. Every month from February through July set a new record high for the job-openings rate, which peaked at 7.0 percent in July before falling slightly to 6.4 percent in August, up roughly two percentage points from the already-tight pre-pandemic labor market of late 2019. In the hardest-hit leisure and hospitality sector, job openings reached a remarkable 11.0 percent rate. At the same time, overall unemployment had fallen only slightly over the previous few months, and the rate of hiring had slowed. In the most recent data through August, there were 1.25 job openings for every unemployed worker.

Continue reading the entire piece here at National Review Online


Noah Williams is an adjunct fellow at the Manhattan Institute and the Juli Plant Grainger Professor of Economics and director of the Center for Research on the Wisconsin Economy at the University of Wisconsin–Madison.

Photo by nd3000/iStock