The recovery of America’s job market hit a pause last month as many businesses — from restaurants and hotels to factories and construction companies — struggled to find enough workers to catch up with a rapidly strengthening economic rebound.
Employers added just 266,000 jobs in April, sharply lower than in March and far fewer than economists had expected. With viral cases declining and states and localities easing restrictions, the recovery from the pandemic recession has been so fast that many businesses have been caught flat-footed in the face of surging consumer demand.
Last month’s hiring slowdown appears to reflect a host of factors. Nearly 3 million people are reluctant to look for work because they fear catching the virus, according to government surveys. More women also dropped out of the workforce last month, likely to care for children, after many of them had returned in the previous two months.
The U.S. Chamber of Commerce called for Washington to immediately stop paying out-of-work Americans an extra $300 a week in unemployment benefits, saying the boost in government aid is giving some recipients less incentive to look for work.
A survey of Dayton Area Chamber of Commerce members found that 78% said they can’t find the workers they need now for open job, Chris Kershner, CEO and president of the chamber, told the Dayton Daily News.
“This is a major problem. With the added COVID-19 unemployment benefits, you basically have private industry competing against the federal government for workers,” Kershner said.
“We need to fully reopen the economy and these added benefits are a significant barrier to get people back to work.”
Multiple industries in the Dayton area have told the chamber they are feeling the same pinch point when trying to find employees, Kershner said.
“They want to move forward now with hiring and what we have to worry about is these jobs not being here in the fall for people,” Kershner said.
The U.S. Chamber said Friday that the supplemental unemployment benefit, part of the Biden administration’s efforts to support the pandemic-ravaged economy, results in about one in four recipients taking home more in unemployment pay than they earned when they were working.
“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” said Neil Bradley, the Chamber’s executive vice president and chief policy officer. “We need a comprehensive approach to dealing with our workforce issues and the very real threat unfilled positions poses to our economic recovery from the pandemic.”
In addition, construction companies and manufacturers, especially automakers, have been left short of parts as a result of clogged supply chains and have had to slow production for now. Both sectors pulled back on hiring in April. And some businesses say they believe that a $300-a-week jobless benefit, paid for by the federal government, is discouraging some of the unemployed from taking new jobs.
Still, companies have added jobs for four straight months, the Labor Department said Friday, though the government lowered its estimate of job growth for February and March by a combined 78,000.
The resumption of hiring has encouraged some Americans to start looking for jobs, which means they are newly counted as unemployed if they don’t immediately find work. This is what happened in April, when the unemployment rate ticked up from 6% to 6.1%.
Employers are now posting far more jobs than they did before the pandemic, and “help wanted” signs dot many restaurant windows. Other tell-tale signs of labor shortages have emerged as well: Average hourly pay rose 0.7% in April to $30.17, which the government said suggests that the fast reopening of the economy “may have put upward pressure on wages.” The average work-week also rose, evidence that companies are asking current employees to work more
“Demand is outpacing supply,” said Daniel Zhao, senior economist at Glassdoor, a job listings website. “That’s something that is occurring across the economy, in semiconductors to lumber, and we’re seeing a similar crunch in the labor market.”
The drop in hiring suggests that the Federal Reserve is still months away from slowing its purchases of Treasurys and other bonds, which are intended to keep long-term interest rates low. Chair Jerome Powell has said that it would take “a string” of reports like the one for March to show that the economy was on track for a full recovery. Fed officials have signaled that they don’t intend to raise their short-term benchmark rate until after 2023.
The extra $300 a week in federal unemployment benefits come on top of state payments that average about $320. The combined benefits mean that anyone earning less than $32,000 a year can receive more income from unemployment aid than from their previous jobs, according to economists at Bank of America.
“Earlier today, I spoke with local small business leaders who expressed they are struggling to find workers due to increased unemployment benefits. Instead of failed programs that encourage government dependence, we need pro-family, pro-growth policies to create jobs, help reignite our economy, and get families back to work,” U.S. Rep. Mike Turner told the Dayton Daily News.
Marie M., who asked that her full name not be used so her comments wouldn’t affect her job prospects, said she was juggling shifts at two separate restaurants in the fall of 2019. When the pandemic hit, she lost both of those jobs.
She collected around $30,000 in unemployment last year, about the same amount she made working in 2019. In July, she plans to start looking for restaurant work again. But this time, she feels more confident she will get the hours she needs. Restaurants are already reaching out to her about jobs, so she can afford to be more selective.
“Unemployment benefits have been like collective bargaining,” she said. “They made a union out of all of us.”
Optimism about the economic recovery is growing. Many Americans are flush with cash after having received $1,400 federal relief checks, along with savings they have built up after cutting back on travel, entertainment and dining out over the past year. Millions of consumers have begun spending their extra cash on restaurant meals, airline tickets, road trips and new cars and homes.
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