WASHINGTON—Many economists are scrambling to weigh whether the federal pandemic unemployment benefits have really discouraged workers from returning to work. There are a variety of factors contributing to the current labor shortage, they say. Early signs, however, show an acceleration in the labor market recovery in states that have ended the supplemental federal benefits early.
Severe labor shortages across the country have prompted 26 states—all but one led by Republican governors—to opt out of the expanded benefit program ahead of its expiration on Sept. 6. The effect on employment data won’t be fully visible until early August when the July jobs report is published. However, continued claims for regular unemployment benefits have recently declined faster in those states that are ending the extra $300 weekly unemployment insurance early. A similar pattern is also observed in initial claims.
