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Enhanced Unemployment Benefits End May Test Labor Market Strength

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Enhanced Unemployment Benefits End May Test Labor Market Strength

September 8, 2021

This month enhanced unemployment benefits will end, some workers will be kicked off benefits entirely, and schools have mostly reopened. This will be the first big test of the labor market, how much damage was done by the pandemic and how the policies associated with it helped or harmed the economy. As of last month, the share of employed Americans between age 25 to 54, was 78%, still 2.5 percentage points below pre-pandemic highs. Though it is also higher than the rates that prevailed for nearly a decade after the financial crisis. This suggests this recovery will be much stronger and sharper than the last one, but whether we can restore the gains made in the last few years remains uncertain. If some Americans left the labor force to homeschool children or developed a different outlook on work, the natural rate of unemployment may be larger. 

Source: BLS

Allison Schrager is a senior fellow at the Manhattan Institute. Follow her on Twitter here.

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