Will end of enhanced unemployment benefits impact staff shortages in Virginia? It’s complicated.

Virginia Politics

RICHMOND, Va. (WRIC)- It’s the first week without an unemployment check for tens of thousands of Virginians after several pandemic programs expired earlier this month. It’s still not entirely clear what impact that will have on staff shortages but there are some early clues.

The expiration date set by Congress means an end to the $300 federal boost to weekly payments and extended benefits for people who have run out of regular state unemployment. A program expanding eligibility to gig workers and the self-employed was also terminated.

Mangum Economics Founder and CEO Dr. Fletcher Mangum serves on the Governor’s and General Assembly’s Joint Advisory Board of Economists. He has more than two decades of experience analyzing the economic impacts of public policies at the state and national level. 

Mangum said we don’t have the data yet to know the full effect of enhanced benefits ending in Virginia. However, he said we can look to Republican-led states that opted out of the program early for some clues. 

“Those states that ended their enhanced benefits early did see lower unemployment rates. When they do the same analysis on employment numbers or employment growth, then there is really no difference and the reason is there is a lot that goes into that employment number,” Mangum said.

Compared to this time last year, Mangum said Virginia’s employment rate is increasing but it still lags behind the majority of states. 

Moving forward, he expects the end of enhanced benefits to give some relief to those struggling with staff shortages. 

“I’m confident they will see an impact,” Mangum said. “Literally if you were making less than $36,000 a year you had a financial incentive to collect unemployment insurance and stay home.”

That said, there are other reasons people may be staying out of the workforce, according to Mangum. He said those could include caring for a sick relative and the continuance of virtual learning for some students. He noted that labor force participation rates for women have declined to levels not seen since the 1970s–when women first began getting jobs in large numbers–largely due to childcare and school-related challenges. 

Staff shortages at Tarrant’s Cafe in Richmond are preventing them from serving every table at once and resulting in longer wait times for food. 

Manager Joe Young said the end of the $300 weekly boost to benefits is starting to have a slight impact. 

“There was definitely a correlation between the benefits ending and applications increasing…maybe 20-25 percent more applications since the benefits ended,” Young estimated. 

So far, Young said it hasn’t resulted in new hires since a lot of applicants are unqualified. He thinks pandemic closures made a lot of experienced people leave the service industry for new career paths. 

“This is the new normal now. Just looking for quality people in a shallow pool,” Young said.

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