Top Line

Although some lawmakers hoped that ending pandemic-era unemployment benefits would spur the labor market, less than one-fifth of Americans cut from the federal government’s pandemic-era unemployment benefits program will be at work by the end of the year. will return, analysts at Goldman Sachs said on Monday. Other contributing conditions—including fear of COVID and increased self-employment—should keep some people off work for months to come.

important facts

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While they acknowledge that “generous” federal unemployment benefits have contributed “significantly” to the recent labor shortage, Goldman analysts expect the cut in benefits last month to create about 1.3 million jobs by the end of the year. Recruitment will boost – less than 20% of the estimated 7.5 million people who ultimately lost profits last month.

Expectations for ongoing labor shortages “reflect a perfect storm of factors” that have discouraged people from seeking work, while demand for labor – as measured by job openings – has risen to an all-time high. The investment bank has written in its note, customer.

Chief among factors, according to the latest Census Household Pulse, more than 3 million people still say the risk of getting or spreading COVID-19 is their main reason for not working. Survey-Down from a high of 6.5 million in August (thanks to increased vaccination rates) but still a substantial proportion of the 8 million unemployed people.

Adding to the labor shortage, the number of visas issued to immigrants and temporary workers “collapsed” during the pandemic, partly reflecting restrictions on entry to the US, which have recently been relaxed, Goldman notes. The prediction of a decline in visas has reduced the available workers. Around 700,000.

In addition, a staggering 1.5 million workers retired early during the pandemic, on top of another 900,000 who naturally dropped out of the workforce.

While they expect the labor market to narrow going forward, analysts expect one million people to still be out of the labor force by the end of next year.

important quotes

“While generous unemployment benefits have contributed to labor shortages, reports of labor shortages are widespread in developed economies, suggesting that general global factors – for example, high health risks – also play an important role,” Jantzius said. The Goldman team, led by, wrote on Monday.

tangent line

The federal government’s pandemic-era unemployment relief expires on September 5, ending long-politicized benefits that states began phasing out in May. Several GOP MPs argued The payments pushed workers to seek jobs and were causing widespread labor shortages, but not all experts agreed. In June, economists at JPMorgan said that the early end of unemployment insurance “is linked to politics, not economics” as several states that announced early reductions (all of which were led by Republicans) did not signal a strong Shown labor market or strong income growth—two factors justify eliminating increased benefits.

main background

Labor shortages have slowed labor market recovery and in some cases delay in production And price hikeIn a recent Goldman survey, nearly 80% of small businesses report that hiring difficulties are hurting their profits. Meanwhile, several data points in recent weeks have pointed to ongoing conflicts around employment. In another sign the end of pandemic-era jobless benefits hasn’t done much to boost the labor market, new unemployment claims over the past three weeks have been higher than expected. The labor market last month posted its worst monthly performance since January, adding only 235,000 jobs back despite forecasts of nearly a million additions.

what to see

The labor market’s next big data point comes Friday, when the Bureau of Labor Statistics is set to report the unemployment rate for September. According to the Labor Department’s monthly jobs report, the unemployment rate seen in the labor market at around 5.2% in August, up from 5.4% in July and well below pre-pandemic levels of 4%.

Millions are unemployed: Why are companies unable to find employees? (WSJ)

US Post records 10.9 million job openings after nearly 11 million Americans lose federal unemployment benefits (Businesshala)

New jobless claims rising unexpectedly despite nearly 6 million Americans leaving unemployment benefits (Businesshala)