EXPLAINER: Did US hiring slow because of a ‘labor shortage’?
The anticipation for the U.S. jobs report for April, released Friday morning, was high
May 8, 2021, 2:52 PM
7 min read
Share to FacebookShare to TwitterEmail this articleFILE - In this Tuesday, March 2, 2021, file photo, a woman, wearing a protective mask due to the COVID-19 virus outbreak, walks past the signs of an employment agency, in Manchester, N.H. Companies are advertising more jobs than they were before the pandemic, when the unemployment rate was a 50-year low of 3.5%. So they clearly want to add workers. Yet hiring stumbled in April because many employers couldn't find as many as they needed. (AP Photo/Charles Krupa, File)
WASHINGTON -- The anticipation for the U.S. jobs report for April, released Friday morning, was high.
Most experts agreed that after a yearlong pandemic, tens of millions of layoffs and widespread disease and death, a likely second straight month of nearly 1 million added jobs would send a clear signal: The economy was bounding back toward full health after a devastating recession.
Instead, the report was a clunker. To nearly everyone's surprise, employers added a comparatively paltry 266,000 jobs, down drastically from a gain of 770,000 in March, which itself was revised down from an initially much higher figure of 916,000.
Once the shock wore off, economists grappled with a host of questions, starting with: What happened last month — and why? What did the tepid hiring gain say about the state of the job market and the economy? And is there really a labor shortage?
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Q. SO WHY WAS THE JOB GAIN SO LOW?
A. The broadest explanation is that any time an economy has to recover from a severe shock, it isn't likely to proceed smoothly. But the pandemic may be causing a broader reshaping of the economy as companies, workers and customers adapt to a new normal. Month-to-month job gains will be choppy. In fact, the swiftness and strength of the recovery so far are themselves part of the cause.
Consumer confidence has surged, and many companies report soaring demand as Americans unleash pent-up desires to travel, eat out, and shop. Sales of new cars and homes are still rising. Yet because the economy is rebounding faster than almost anyone thought it would, many companies were caught flat-footed. Surging consumer demand has caused widespread shortages of parts and raw materials, including lumber, semiconductor chips and even chicken wings.
Now, workers themselves can be added to the list of shortages. Companies are advertising more jobs than they were before the pandemic, when the unemployment rate was a 50-year low of 3.5%. So they clearly want to add workers. Yet hiring stumbled in April because many employers couldn't attract as many as they needed.
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Q. WHY AREN’T EMPLOYERS ABLE TO HIRE MORE EASILY?
A. Several things: Nearly 3 million people avoided looking for a job in April because they feared becoming infected by the coronavirus, according to a government survey. About 2 million women have stopped looking for work since the pandemic, likely because of disruptions in schooling and child care. In April, all the net job growth went to men; women as a group lost jobs. In addition, construction companies and factories have been left short of parts because of clogged supply chains and have had to slow production. Hiring weakened in both sectors in April.
And some businesses complain that a $300-a-week federal unemployment benefit, provided in President Joe Biden’s $1.9 trillion rescue package, has meant that many unemployed people can receive more income from unemployment aid than from their former jobs.
Jan Riggins, who manages two Express staffing offices in Fort Worth, Texas, said that some job seekers have turned down offers that paid less than they were receiving from benefits. She said health concerns are also a factor, noting that the open jobs that allow working from home, such as taking customer service calls, have been quickly filled.
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Q. WILL ALL THESE ISSUES CONTINUE TO HOLD DOWN HIRING IN THE COMING MONTHS?
