As restaurants, manufacturing firms and other businesses struggle to fill positions, a looming cut-off for expanded federal unemployment benefits could pressure workers to return to the workforce.

At the urging of business groups, Gov. Greg Abbott said on Monday that Texas will opt out of all federal unemployment assistance programs after June 26, months ahead of when Congress scheduled these programs to expire in early September.

Among the assistance being cut off is an extra $300-per-week federal benefit for unemployment, as well as a Pandemic Unemployment Assistance, which provides aid to gig workers, self-employed workers, and others who aren’t traditionally covered by unemployment insurance.

Some local businesses have raised wages and offered sign-on bonuses in an attempt to entice workers.  Others have made the calculation that the workforce will snap back quickly as the pandemic wanes and benefits expire.

Mike McIver, vice president of manufacturing at PSI, a San Antonio company that produces tire pressure systems for long-haul trucks, said he thinks employers will soon “have a choice of 10 candidates to choose from instead of one.”

His firm has seen “nobody” come through the firm’s traditional recruiter in recent weeks for their newly open positions. Although he said the firm hasn’t particularly suffered as a result, “each week gets a little tighter.” He’s reaching out to graduating senior college students to come on as summer interns.

The same dynamic has been on display at SeaWorld San Antonio, where a Seven Seas Food Festival running through May has been stymied by dozens of unfilled positions in its culinary operations. The park has begun to offer a $200 hiring bonus.

Businesses across the board in the county are on a hiring spree as consumer spending ramps up. Figures last month from the Federal Reserve Bank of Dallas show net payrolls in San Antonio grew by 7.1% in the first quarter of 2021, representing 18,050 new jobs.

Amid this hiring spree, unemployment numbers across the state have ticked downwards in recent months.

In Bexar County and the surrounding seven counties, the unemployment rate dropped by nearly a percentage point in April to 5.6%, down from the March rate of 6.5% and less than half of the April 2020 rate of 12.3%, according to Workforce Solution Alamo’s report released last week. Unemployment is the lowest it’s been since March 2020, when Texas was first shut down amid the encroaching pandemic.

What role expanded federal benefits play in the local labor market isn’t agreed upon. While many employers think they are keeping workers on the sidelines, jobless workers say the extra money is vital.

“The governor’s decision has caused me a great deal of pain,” said Henry Williams, a maintenance worker, as he left a jobs fair at Workforce Solutions Alamo’s office on East Houston Street.

He said he’s been looking for a job since last summer, when his former employer closed shop and laid everyone off. The 62-year-old said he believes employers are reluctant to hire him because of his age, although he said he is experienced in plumbing, sheetrock work, painting, and is forklift certified.

The average weekly benefit for those on unemployment insurance in Texas was $409.87 in April, not including federal aid.

Businesses in sectors that traditionally rely on a workforce that is often ineligible for these kind of benefits – students and recent graduates – say they have not experienced the same difficulties in hiring.

Adrianna Hagan, president of Mad Science, a summer camp in Austin and San Antonio, said the camp hasn’t had much trouble hiring summer camp counselors, who are typically college students working over the summer.

Babysitting Connection, a baby sitting firm that expanded into San Antonio in March, has also had few problems hiring in the area, said Beth Hayer, the company’s founder and CEO. She said they’ve had an abundance of applications coming in, many from students at the University of Texas at San Antonio.

Brian Strange, the president and CEO of catering business Don Strange of Texas, said they’ve had “better luck than most” with recruiting part-time labor, much of which is drawn from recent college graduates.

It’s not just employers who believe the end of expanded federal benefits will change the labor market.

Keith Phillips, assistant vice president and senior economist at the Federal Reserve Bank of Dallas, said last month that the expanded benefits have allowed many workers to hold out for the optimal job. An April survey by job search site ZipRecruiter found fewer job seekers felt financial pressure to take the first job offer they received – 35% compared with 51% when the same question was asked in 2018.

But, Phillips said, the expiration of those benefits may hasten a return to work, and those who hold out may face a tougher market for job applicants.

“You don’t want to be the last one unemployed,” he said.

Waylon Cunningham

Waylon Cunningham writes about business and technology. Contact him at waylon@sareport.org.