The End of ARPA Unemployment Subsidy

September 14, 2021
Read time: 2 mins

September 6 marked the expiration of the American Rescue Plan Act’s additional $300 weekly federal unemployment stipend. Hope is running high that it will ease our current recruiting challenges, return us to an employer-driven hiring market, and aid our economic recovery.

Well, it may not be the cure-all we all wished for!

In May 2021, 26 states announced their intent to end federal pandemic-era benefits in the months of June and July.

CNBC shared information in two articles on this topic. One referenced UKG, a payroll and time-management firm. It studied shifts among hourly workers in the 26 states and found unemployment rates grew at half the rate as states that continued the benefit. In the other article, Dr. Arindrajit Dube, an economics professor at the University of Massachusetts, noted that Census Bureau data indicates the recipients whose unemployment benefits were decreased did not rush to find jobs, even though their state had stopped providing the supplemental benefit. On the contrary, 12 states that ended the federal unemployment subsidy saw 1.4 percent fewer adults employed, versus a rise of 0.2 percentage points in states that didn’t end the pandemic benefit.

So what are the experts saying are the reasons behind the hesitation to return to work? Many point to continuing childcare issues and school schedules making it difficult for parents to find work that meets their needs. Those who can’t work from home may still be cautious now that the delta variant has proven its virulence, and workers may have relocated or changed industries. Combined with the estimated 10,000 baby boomers turning 65 each and every day—well, hiring isn’t likely going to get any easier.

If you have been waiting for the unemployment stipend to end, hoping it would bring a new wave of applicants rushing to your door, do you have an alternative plan at the ready? Studies show you may want to lean toward alternate solutions such as flexible schedules, part-time work, or job sharing.