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Economist: Labor shortage largely caused by other factors, not pandemic unemployment benefits

As businesses look ahead to the holiday months, they also could soon face another hurdle with finding seasonal help.

INDIANAPOLIS — We’ve all seen the “help wanted” signs at restaurants and retail stores.  

No matter how you slice it, or who you blame, our state's experiencing a labor shortage. The question is, what’s fueling the problem and why can’t employers find workers? 

“There are people who are looking for work, but the people who are looking for work are not finding the jobs that are out there,” said Timothy Bond, an associate professor of economics at Purdue University. 

Bond said a few months ago, experts believed this was largely due to pandemic unemployment benefits, but last month, those benefits expired. Based on early data, economists aren’t seeing the labor boom they expected.

A recent report from Yale economists also found that there is no evidence that federal pandemic unemployment programs authorized in March reduced employment.  

“The unemployment benefits were certainly the most salient feature and we haven’t seen that strong of instance that led to an increase in workers coming back to work,” Bond said.  

RELATED: What's really behind the labor shortage in all areas of our economy?

Experts say there are a number of other factors fueling the labor shortage including childcare issues, changes in careers, early retirement and fear of COVID in the workplace — especially those in the hospitality industry.  

“People that had been working in those positions prior to the pandemic now see those jobs and see them at a very elevated level of both potential risks depending on the circumstances as well as a much harder job,” said Andrew Butters, an assistant professor of business economics and public policy at the Indiana University Kelley School of Business. 

RELATED: US unemployment claims rise for third straight week to 362,000

Butters said it could be some time before we see any changes.  

“What we are seeing right now is really just the consequences of the labor market still not being quite in equilibrium,” he said.  

Experts worry that by not matching workers with jobs, the pressure of the labor market will cause more inflation.  

“It could lead to an increase in prices, and we are seeing that right now in the data,” Bond said.  

As businesses look ahead to the holiday months, they also could soon face another hurdle with finding seasonal help.  

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