DETROIT – More than a year into the pandemic, the country is doing its best to get back on its feet, and the local government is trying to encourage a return to normal. Indeed, as early as July, COVID-era relief programs have begun to expire in Michigan and other states. Such programs include, among others, student loan forgiveness, eviction bans — and unemployment benefits. In particular, the programs have been helpful to those who previously lived paycheck-to-paycheck before the pandemic, with TCF.org reporting that 1 in 4 Americans were heavily reliant on aid.
With millions on the hunt for work, employers everywhere are gearing up for a massive shift back to business as usual. And here’s what you should know so you can plan accordingly.
Federal unemployment benefits will expire
Following massive layoffs early last year, the federal government began offering generous unemployment benefits to those whose jobs were affected directly by COVID-19. For more than 52 weeks in a row, the Department of Labor reported more than 1 million Americans filing for these benefits each week.
Fast-forward to the present day with pandemic restrictions continuing to ease, the government has announced that benefits will stop on September 4.
Though the government provides the funding, the required funds came from two taxes that all businesses are obliged to pay: the Federal Unemployment Tax and the State Unemployment Tax. This means that on average, a business pays a maximum of around $420 per employee. This is currently one of the biggest headlines on AskMoney.com, and businesses really need to pay attention to the finer details. According to the aforementioned finance website, 26 states including Michigan opted out early and slashed benefits as early as June.
This move, which was based on the belief that benefits disincentivize the unemployed from looking for work, was met with mixed reactions. Most governors, such as Michigan’s, argued that doing so saved their state millions. However, workers from a number of these states lobbied to get these benefits reinstated, especially given that the federal government (and not the state) facilitates the benefits.
Job openings are surging
Undoubtedly, unemployment benefits are playing a crucial role in helping to sustain families while people search for work. Meanwhile, employers have struggled to hire at the same pace at which the US economy began to recover. In fact, US job openings surged to over 10 million in June, with employers adding over 943,000 jobs in July. Over 83,000 of these open positions are based in Michigan alone.
However, an article on Nbcnews.com notes that, due to a number of factors, there is currently a mismatch between the number of job openings and those actively seeking work. These factors include employers’ refusal to increase hourly wages, a lack of childcare-related benefits for working parents, and the reluctance of some workers to apply for jobs where they’re required to be vaccinated against COVID-19.
To counter this, other employers have offered increased hourly wages and even signing bonuses for those applying. And they have subsequently reaped positive results as a result.
Many believe that September is too soon
With the Delta variant now detected in all 50 states, many people are arguing that September is too soon for the federal government to pull back on unemployment benefits. In fact, even without Delta, EPI.org found that cutting off unemployment benefits would lead to decreased spending, something that would negatively impact economic growth.
However, despite unemployment benefits, many industries — including venture capital, as discussed here on MiTechNews.com — are flourishing. And with similar studies, such as those conducted by Yale and the J.P. Morgan Institute, reporting that aid does little to dampen job-hunting tendencies, it’s safe to say that helping workers feed their families while they find stable employment is one very productive way to spend the taxes your business pays.