The Federal Reserve released its semiannual report to Congress last week, and widespread unemployment insurance was shown to be a huge factor in the United States’ weak post-Covid economy.
The report explained how the market has largely reopened and over a million jobs have been added. However, although the unemployment rate has been decreasing, it has been doing so at a slow pace. In fact, the unemployment rate is still higher than it was pre-pandemic. It is currently around 5.8% (adjusted to 8.7% to match pre-pandemic conditions) and was under 4% at the end of 2019. This is not because of a shortage in jobs. Employers everywhere are struggling to find enough people to fill their open positions. They have tried to increase pay and lengthen workweeks for existing employees.
Overall, there are more open positions than there are job seekers. One of the biggest reasons for this is the continued unemployment insurance, which has been supplemented by the federal government due to the pandemic. Its planned expiration date is September 6, but some governors, mostly Republicans, have already opted out of it.
In a study done by WalletHub to find out which states were bouncing back the quickest, the top ten states were those that had Republican governors. One explanation for this may be that the governors of red states have opened the states back up, making it easier for job seekers to go out and find work.