When teaching research methods for graduate students at McDaniel College we learn how to identify variables either related to or causing specific outcomes. We identify these influences as independent variables. What we frequently find is that outcomes don’t have a single independent variable or cause, but many. There are fancy statistics that can put a weight on each variable, but the interaction of these variables is what makes these studies interesting and complicated.
A common belief over the past summer was that extra federal unemployment benefits were keeping employees from returning to work. Many Republican governors terminated these benefits to encourage them to return to the workforce. Others made the argument that COVID-19 fears, the lack of child care, and low wages were keeping folks home, not the extra unemployment benefits.
Since then, several studies have looked at this issue in order to try to determine the independent variables related to or causing our nation’s worker shortage. What we are finding, however, is that the answers don’t fit simple political explanations. They seldom do.
Researchers at The Wall Street Journal and the U.S. Labor Department looked at the 25 states where benefits were cut for 3.5 million people and compared their job growth data to states where benefits continued. Did, in fact, workers return to work when unemployment benefits were cut? The Wall Street Journal analysis found, “States that ended enhanced federal unemployment benefits early have so far seen about the same job growth as states that continued offering the pandemic-related extra aid.”
The Labor Department found that nonfarm payrolls rose 1.33 percent in July from April in the 25 states that ended unemployment benefits compared to 1.37 percent for the other 25 states that did not end the benefits. For example, Texas ended benefits and saw a 1.45% payroll growth. California did not end benefits and saw a slightly higher 1.73% increase.
The termination of benefits did push some workers back into the workforce. Goldman Sachs found that “benefit expiration increased the rate at which unemployed workers became employed.” However, it is a large jump from “increased the rate” to finding that the unemployment benefits were the primary independent variable keeping the majority of available workers at home. Data from the Labor Department puts that argument to rest.
I’m not surprised at these findings. Managing a workforce of more than 220 employees, I could see that there are many independent variables confronting workers today. Child care, for example, related to the closing of schools and day care centers, has been a significant variable. Many employees, especially single parents, had to stay home with their children. However, I hoped that once kids were back to school in September we would see an increase in applications. We did and, for my agency, hiring increased in September and October.
Another independent variable is whether a company laid off workers during the pandemic. From my observations, workplaces that did are now having a more difficult time recruiting workers than those that did not. Perhaps employees don’t want to work at places where reliable employment is in question.
An important independent variable is hourly wages. Why return to a job that pays $12 per hour when there are so many jobs available now that pay $15 or more per hour? Any company paying less is at a significant disadvantage. This is why so many child care companies are having a difficult time finding workers. With child care already too expensive for many families, passing on increased labor costs to families is forcing many to stay home instead of sending their kids to child care.
Think about it. The average cost for child care in the U.S. is $1,200 per month. If you have two children and you are working full-time at $13.85 per hour, you are grossing just enough to pay your annual child care bill ($28,800). After taxes and other payroll expenses, you are now in a deficit. A single parent may as well stay home and take care of his/her children and save the cost of gas and other work-related expenses.
Another independent variable more difficult to measure is the impact the COVID-19 pandemic has had on our view of life and work in general. I think many Americans are reevaluating their priorities and finally taking a more European view of work-life balance. The increase in retirements over the last two years supports this hypothesis.
Writing for The New York Times, Farhad Manjoo sees some long-term benefits in Americans’ evaluation of work. For example, he states that workers now have attained “some measure of leverage” over their employers. In addition, he states that the shortage of workers “has led to a growth in wages that has surpassed many economists’ expectations.”
There are many independent variables related to the current worker shortage. Perhaps the most significant one is that employees now have more control over their work-life than ever before and are voting with their feet.
Tom Zirpoli is the program coordinator of the Human Services Management program at McDaniel College. He writes from Westminster. His column appears Wednesdays. Email him at email@example.com.