Why are Americans Choosing To Stay Unemployed?

Despite a surge in hiring across industries in the US, many Americans choose to stay unemployed during the ongoing Covid-19 crisis. They are not worried about the security of their jobs or looking out for employment opportunities as the economy reopens. As per an online job portal, the labor force participation rate remains sluggish compared to the active online job postings in the US. In contrast to the popular belief that people got fired or furloughed from their jobs, they choose to stay unemployed of their own free will.

This article aims to understand the change in the employment situation in the US, with the gradual opening up of the economy. The statistical data and opinions of the people stated in the article are based on the inferences of several social conversations and research studies conducted by our social intelligence team to know the underlying truths behind the surfacing unemployment trend in the US.

The New Unemployment Trend in America

The US economy and job market are witnessing a steep decline for the past few months now. The ongoing coronavirus pandemic is one of the leading factors to the rise in the unemployment rate (nearly 43% in March 2021). If the trend continues, it is bound to have long-term effects on the US economy in the form of:

• loss of incomes
• erosion of human and social capital
• declining growth rate (GDP)
• reduced tax collections
• increased defaulters of loans, rent, and mortgage payments

Millions of Americans choose to remain unemployed, specifically the vulnerable workforce in the retail, hospitality, leisure, travel, and entertainment sectors and the low-wage earners in the construction, manufacturing, and warehousing industries. Let us deep dive to understand the reasons that Americans are giving for staying unemployed.

Rationale For Staying Unemployed

1. Desire to Focus More on Personal Life

Almost 47% of the Americans (32% blue-collar and 15% white-collar employees) do not want to get back to the earlier hectic schedules of working more than 40 hours per week, which jeopardized their personal lives. They now wish to spend quality time with their spouses, children, parents, and other family members. They feel the need to keep an eye on their children taking online classes of the school, take care of their little toddlers who can't go to day-care centers, attend to old or ailing parents due to restricted availability of the elder-care services, or play with their pets. They aspire to maintain a work-life balance where they can relax, meditate, pursue a hobby, exercise, and have a good leisure time with family, along with fulfilling their work commitments. They want to add more meaning to their lives and look for opportunities that align with their values.

In a nutshell, enjoying life events, strengthening interpersonal relations, and pursuing interests of their choice are the three key things Americans are looking at for the moment.

2. Unemployment Benefits

In March 2020, the US federal government enacted the $2.2 trillion economic relief bill called CARES Act to provide financial aid and unemployment insurance to unemployed Americans hit by the pandemic. It offers a weekly compensation of $600 to out-of-work Americans to help them meet their ends and pay their regular utility bills, rent, insurance, etc. The Act stands to support the workers laid off due to the state lockdown orders.

Though the financial aid is for unemployed people, these schemes are, in a way, dissuading many of them from returning to work. It is further spiking the mass unemployment rate in the US. Millions of Americans have filed applications for these unemployment benefits leading to the draining of state unemployment funds. About 41% of blue-collar workers believe that they are satisfied earning less while being unemployed. They are ready to take the risks of not getting their job back if they change their minds to resume work once the economy fully reopens. By introducing unemployment insurance and payment plans, the government has made it convenient for people to stay at home and get paid for not working. Hence, the unemployment schemes are proving to be a disincentive for Americans to return to work at the moment.

3. Unwillingness to Take Safety Risks

Health and safety are the most talked-about topics across the globe in the ongoing pandemic situation. With social distancing being the new normal, stepping out of the houses to work is a dissuading factor. The deterrent is more for people having underlying health comorbidities and for the work requiring face-to-face public interaction. 

A minority population of Americans is not eager to go back to work or explore other employment opportunities due to the looming fear of Covid. Nearly 10% of the social mentions by people who chose to remain unemployed have applauded President Joe Biden's executive order to the Department of Labour. The order states that a worker has a federally guaranteed right to refuse to report to work due to the fear of unsafe working conditions or if they sense risks to their health in the ongoing coronavirus pandemic. Nonetheless, they will still be eligible for federal unemployment compensation and insurance. 

The new order is a privilege for Americans who are more exposed to the risks of catching the coronavirus infection due to an underlying health condition and are thus unwilling to return to work.

4. Greener Pastures in Freelancing Jobs

In today's uncertain times, some Americans are contemplating and re-considering their career goals and decisions. After facing more than a year of crisis, they no longer wish to pursue physically demanding jobs with odd hours and moderate pay. 

Freelance jobs are an exciting alternative for unemployed Americans looking for flexible working conditions and become independent owners of their work. These jobs are in demand in the fields of Computers, Mathematics, Finance, and Business Operations. 

A study conducted by Upwork's seventh annual study entitled 'Freelance Forward' revealed that more than one-third of the American workforce (nearly 59M) has taken up freelance projects amid the Covid-19 pandemic, contributing $1.2 trillion to the US economy. The contribution was 22% higher than in the year 2019, primarily due to the economic stress faced by highly skilled professionals. The young population is now opting for the flexible and autonomous set-up of self-employment to traditional employment and exploring freelance opportunities to adapt to the changes and uncertainty of COVID-19.

Nearly 2% of the research respondents opined that freelance projects offered them the dual advantage of keeping their plates full while having ample free time to focus on their personal life. Thus, they did not feel the need to search for a full-time job. 75% of freelancers believed that it has helped in honing their skills and increasing their earning potential. Consequently, they were considering taking freelancing as full-time employment in the future.

Plan of Action by the Companies

The US companies are on the path to recovery and have started responding to the prevailing catch-22 situation. They are revising their Human Resource policies and hiring strategies to attract unemployed Americans and encourage them to resume work. Some of the strategic plans of actions employed by the Human Resource professionals to fill in their open positions are as below:

• Effective communication with the old employees and applicants (both in-house and external) to apprise them of job openings and rehirings
• Virtual or remote recruitment techniques for an expansive reach to the prospective candidates
• Recruitment ad campaigns on social media platforms
• Increased employee benefits such as work-from-home, transportation, sanitized work environment (as per Covid norms), sick leave policies, and health insurance
• New openings for freelance, contingent, and contractual workers 
• Digital Learning and Development programs (online training that employees can pursue from home)

Conclusion

The results of the research studies infer that the decision to stay unemployed is based on several beliefs as expressed by the respondents. Increased unemployment benefits, improved work-life balance, health risks, and flexible freelance work opportunities are some of the rationales of many out-of-job Americans for choosing to stay unemployed for a prolonged period. The Human Resource professionals of the companies can be a savior to the present situation. They need to devise strategic Human Resource policies while filling open positions and creating their hiring plans.