Unemployment Checks May Not Be The Reason Your Franchise Can’t Hire

In recent months, franchise brands, particularly foodservice brands, have been plagued by a labor shortage, even as the economy at large rebounds from the COVID-19 pandemic. 

A chorus of Right-leaning pundits and Republican lawmakers have called for an end to heightened unemployment benefits, which they say are keeping the workforce on the sidelines. But according to an article in USA Today published Friday, the root of the labor shortage may not be federal aid. In fact, reducing that aid may make it even more difficult for unemployed workers to find jobs.

Critics of the increased federal aid argue that laid-off workers are finding a greater income from unemployment checks than they would as working employees.

"Basically, employers are having to compete with these programs,'' said Aneta Markowska, managing director and chief financial economist for Jefferies LLC. in the article, "In most cases...people actually make more on these benefits.’’

That theory has become so prevalent that a number of states have already begun cutting supplemental financial aid meant to last through September. 

But many economists argue that increased unemployment benefits do not, as a rule, discourage unemployed workers from seeking jobs. 

From USA Today:

Homebase, which provides employee scheduling software, says employment actually grew 1.7% more slowly last month in states that are eliminating the $300 federal aid early. 

 

The Century Foundation says that in the four states that ended the $300 federal bonus on June 12, claims for state benefits rose by 3.7% from June 12 to June 19 while applications climbed just 1% during that period in the other 46 states and Washington, D.C.

Many workers laid off during the pandemic have applied for jobs only to find they are deemed overqualified. For them, unemployment benefits are a crucial lifeline as they seek higher-skilled and less-available jobs.

So, if increased federal aid is not the source of the labor shortage, what is? The article offers a number of potential factors, including an apprehension to return to workplaces considered high-risk for COVID and other communicable diseases; increased demand for childcare; and increased leverage among workers benefiting from a newly hot job market.

There is currently one unemployed individual per job opening, according to Lydia Boussour, the lead U.S. economist at Oxford Economics. Many industries, however, have far less than one unemployed worker available for each slot, including educational and health services, professional and business services and the hard-hit leisure and hospitality sector, she says.  

Additionally, the number of unemployed Americans who quit or voluntarily left their previous position and started looking for a new job in June rose by 164,000 to 942,000, according to the Bureau of Labor Statistics.

 

That increase "conforms with the notion that people are quitting their jobs and looking for something better as we enter a post-pandemic age,'' says Stettner.

So, where does that leave franchise brands still suffering from a lack of applicants? For starters, they may have to get used to a more competitive job market and tailor their benefits and wages accordingly. But in many states, they are receiving some help. Some states are offering one-time bonuses for unemployed workers who return to work.

Read the full article at usatoday.com.