SC cut off COVID unemployment aid for workers. Did it get people to go back to work?
In June, S.C. Gov. Henry McMaster joined more than a dozen other Republican states in an experiment: Cutting off the expanded $300 a week in extra COVID-19 unemployment benefits to see if their loss would encourage people to get back to work.
Despite the end of those additional unemployment benefits on June 27, the state’s unemployment picture changed little, data from the state labor department show. The state did see job gains, but it was far from the tidal wave that some officials had wanted.
“While one month doesn’t tell us (everything),” Federal Reserve economist Laura Ullrich said, “it does not appear that South Carolina ending unemployment benefits in June led to some outsize increase in labor force or employment.”
From May to June, while people were still receiving the extra unemployment benefits, the number of unemployed workers in South Carolina people dropped by about 3,400, according to the state Department of Employment and Workforce. From June to July, when the benefits disappeared, the number of unemployed people dropped by 3,600. Across the state, 103,464 people remain jobless, an unemployment rate of 4.3%.
McMaster ended the extra unemployment benefits in an effort to force people back into the labor force and help solve the state’s worker shortage.
“What was intended to be a short-term financial assistance for the vulnerable and displaced during the height of the pandemic has turned into a dangerous federal entitlement, incentivizing and paying workers to stay at home rather than encouraging them to return to the workplace,” McMaster wrote in a letter to the state labor department in May. .
But Ullrich, who studies the employment picture for the Carolinas for the Fed, has said since May that ending the unemployment benefits was unlikely to be a one-shot solution for the state’s worker shortage problems.
“I didn’t expect it to be this panacea that would lead everyone to walk right back into the labor force,” she said Friday.
On Twitter Friday, McMaster said steady decline in unemployment was great news for the state.
“Our measured response to COVID-19 and resistance to draconian, anti-business policies continue to pay off for the people of our great state,” McMaster wrote in a tweet.
A far-from-perfect jobs picture
South Carolina remains down 57,000 jobs compared to before the pandemic, according to the Federal Reserve. However, the state did see its biggest gain of new jobs for 2021. From June to July, the state gained 20,100 jobs, a three-fold increase from May to June, when the state gained just 6,300 jobs.
Neighboring North Carolina kept the expanded unemployment benefits from the federal government but gained a vastly higher proportion of jobs last month compared to South Carolina. Even though North Carolina has roughly double the population of South Carolina, it gained more than three times as many jobs in July — 75,600, according to the Federal Reserve.
South Carolina employment is now down 2.6% compared with before the pandemic, but North Carolina is only down about 1%.
When asked whether the governor felt that ending the unemployment benefits had worked as hoped, McMaster spokesman Brian Symmes said the state was headed in a positive direction.
“The goal of returning to pre-pandemic benefits was to get South Carolinians back to work and match those people with the businesses which were desperate for staff. And the jobs numbers have increasingly shown that’s exactly what’s happening,” Symmes said. “The number of unemployed South Carolinians is down and the number of employed South Carolinians is up, along with the labor force participation. That’s all good news for the state as a whole.”
Workers and economists have noted that unemployment benefits are far from the only reason why many people can’t or don’t want to return to the workforce yet. COVID-19 fears are still high; child care is often expensive, and children were out of school for the summer; and many people don’t want to return high-stress but low-paying jobs in sectors like hospitality.
One person told The State in June that ending the benefits early was “absolutely going to bankrupt” him because he had health problems that made him susceptible to the coronavirus.
Advocates unsuccessfully sued McMaster and the state labor agency last month in an attempt to restore the extra $300 a week benefits.
Growth in hospitality
Nearly half of the state’s new jobs last month — 9,300 — were in leisure and hospitality, the first time all year that the sector saw growth of that caliber.
But hospitality continues lag behind other sectors in job gains. It now makes up nearly half of the state’s unrecovered jobs — 28,400 out of 57,000. Hospitality workers are also among those who would’ve seen the most benefit from the expanded unemployment aid.
The hospitality industry is still 10% behind where it was before the pandemic began. It has creeping upward in employment for the last year, often seeing a month or two of gains matched by just as many months of zero growth or even declines. Part of this might also been coming from the fact that many people have left the hospitality industry for higher paying jobs in other sectors, Ullrich said.
“It’s not that companies don’t want to hire; they just can’t find employees,” Ullrich said.
But she shied away from saying it’s because people “simply don’t want to work,” as McMaster has said in the past several months. Instead, people are looking to leave the industry for jobs that pay better, and in some cases, treats their employees better, as well.
The next challenge facing the state will be how the recent spike in COVID-19 cases affects the economy. Previous virus spikes have resulted in increasing unemployment, as people leave jobs to avoid being infected or are sent home due to exposure or testing positive themselves.
However, whatever happens likely won’t be similar to the major swings we’ve seen during past waves of the coronavirus, Ullrich said.
This story was originally published August 20, 2021 at 2:21 PM with the headline "SC cut off COVID unemployment aid for workers. Did it get people to go back to work?."
