Amid COVID outbreak, states cutting benefits still see no increase in hiring

WASHINGTON, Sept. 17 (Reuters) – The August slowdown in U.S. job creation hit hardest in states that unplugged increases in federal unemployment benefits early on, places where an intense wave summer of coronavirus cases may have dampened hoped-for job growth.

New state-level data released by the Bureau of Labor Statistics on Friday showed that the group of predominantly Republican-led states that dropped a $ 300 weekly unemployment benefit over the summer added additional jobs in August at less than half the pace of states that retained allowances.

Elected leaders from those states argued that the payments, in place since the spring of 2020 to help families weather the pandemic, discouraged people from working and held back an economic recovery that appeared to be gaining momentum earlier this year when the impact of vaccines was being felt and coronavirus cases were on the decline.

But some of those same states, notably Florida and Texas, are also hotbeds of opposition to government health mandates like wearing masks, and the spike in infections there in July and August seemed to dampen l hiring in the types of “close contact” companies that suffered the most during the health crisis and had started to recover quickly.

Overall employment in recreation and hospitality fell about 0.5% in the 26 states that ended benefits, and rose 1% elsewhere.

In Florida, where the weekly average of new cases per 100,000 population rose from less than 50 in June to more than 700 in August, employment in the industry fell by 4,000 after increasing steadily this year.

In Texas, where new infections per 100,000 hit a low of less than 30 in June to top 400 through August, the industry has lost 25,000 jobs after six months of steady growth. Georgia, which has also seen a dramatic increase in infections, has lost nearly 7,000 jobs in the sector.

In contrast, California and New York, where outbreaks caused by the Delta coronavirus variant have been more mitigated and health controls have tended to be tighter, have added around 33,000 and 7,000 jobs to the industry respectively.

Data is fueling debate on the impact of ending pandemic unemployment benefits on the economy – whether it will motivate people to take jobs or leave them cash-strapped amid a new wave of viral and hardship with problems like finding childcare.

The benefits ended nationally in early September, and some economists have noted that shifting these public payments to private incomes may not happen quickly enough to avoid a blow to the overall economy.

While the wave of Delta variant infections may be peaking, the weak employment growth in the economy in August, at just 235,000, was seen by many analysts as evidence of the risks that the pandemic is still weighing on the recovery.

Economists analyzing the unemployment issue have yet to see little evidence that the removal of benefits has clearly boosted local labor markets, in part because of the difficulties in separating the influence of payments from larger trips of the hand. -work, or potentially compensatory damage done by the pandemic.

Goldman Sachs analysts, looking at the data at the individual level, found that ending payments increased the likelihood of a person going from unemployment to a job, and expect national insurance to expire. – Additional unemployment results in the addition of an additional 1.3 million jobs by the end of the year.

“The behavioral response to the expiration of unemployment insurance benefits remains highly uncertain due to the unprecedented scale of benefit fluctuations and the highly unusual economic and health situation,” Goldman economist Joseph wrote on Friday. Briggs.

Reporting by Howard Schneider; Editing by Dan Burns, William Maclean

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