Good News: Last Thursday, new claims for unemployment benefits fell to 498,000 during the week ending 6 May, the fourth consecutive weekly decline, the fourth week of claims below 600,000, and the lowest number since the pandemic began 14 months ago, the U.S. Labor Department reported.
The figure beat the consensus estimate of 538,000 among economists surveyed by Bloomberg.
However, the number might not hold; the previous week’s initial report of 553,000 has now been revised to 590,000.
Continuing claims rose to 3.69 million, worse than economists’ median guess of 3.62 million.
Before the COVID War, new weekly claims for unemployment benefits averaged near 200,000.
Bad News: The next day, the new job numbers chilled the previous day’s unemployment benefits report.
The U.S. Labor Department reported that the U.S. economy added only 266,000 net new jobs in April, the weakest showing since January and barely a quarter of the one million jobs economists had expected.
The poor performance followed the downward revision of March’s payroll additions to 770,000.
An estimated 8.2 million Americans remain out of work in the wake of the COVID pandemic.
April’s feeble record had several causes:
- Many employers are waiting for more signs that the economic recovery is firm before expanding payrolls;
- Generous state and federal unemployment benefits combine to keep workers at home, especially in low-wage businesses such as hotels and restaurants;
- Some workers are afraid to go for the pandemic to recede further before venturing back into the workforce;
- Women who could work may have trouble finding transportation or affordable child care.
Restaurants, hotels, and other businesses in leisure and hospitality added 331,000 jobs as lockdowns on public gathering places eased.
In contrast, manufacturing cast off 18,000 jobs, as the persistent shortage of computer chips idled factories. Retailers took 15,000 off their payrolls as robust consumer spending in the spring continued to drift from brick-and-mortar stores to the web.
Average private-sector hourly pay in April rose 21 cents to $30.18 as employers dangled more pay to lure workers back to their jobs.
Why Work? With businesses short of workers while nearly ten million people remain unemployed, Florida, Montana, North Carolina, and other states are beginning to tighten requirements to receive unemployment benefits and end them for people who refuse jobs offered to them.
People collecting jobless benefits receive an average of $318 a week in state compensation plus another $300 from the federal government.
That total jobless benefit averaging $618 a week beats, or at least rivals, the $600 earned by working a 40-hour week at $15 an hour.
A growing number of states, and several business groups, believe the extra $300 a week in federal jobless payments, combined with serial federal stimulus checks, are keeping people from returning to the workforce.
President Biden dismissed the claim, citing April’s dismal hiring numbers (see related story) and the 9.8 million people still out work to justify continuing the $300 federal benefit.
The U.S. Chamber of Commerce is calling for an end to the federal payments; the governors of Montana and South Carolina said last week they will deny claimants’ access to the federal bonus, even though the program will continue through September at the national level.
Instead, Montana governor Greg Gianforte will offer his state’s residents a $1,200 “return to work bonus” if they were collecting unemployment on 4 May but get a job and hold it for at least four weeks.
April’s “disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” Neil Bradley, the national chamber’s chief policy officer, complained to the Wall Street Journal.
The National Federation of Independent Business reported that 44 percent of small business owners have job openings they cannot fill.
For the last quarter of 2020, 43 percent of unemployed Americans were about to exhaust their jobless benefits; 57 percent returned to work or otherwise stopped claiming payments before their eligibility expired, according to U.S. Labor Department data.
In the first three months of this year, 407,000 people were denied unemployment benefits because they did not look for work or affirm they were available for work, the U.S. Labor Department reported.
Pay Up: In March, U.S. salaries and wages climbed for the 11th consecutive month and finally topped their February 2020 peak, the federal Bureau of Economic Analysis reported.
Workers’ pay in the aggregate climbed to a seasonally adjusted $9.78 trillion from $9.87 trillion year over year.
The same recovery in paychecks took twice as long to reach when the Great Recession eased, Business Insider reported.
Low-skilled workers led the wage rally as the vaccine campaign persuaded more restaurants and other leisure and hospitality businesses to reopen; some businesses are offering higher pay to coax workers back.
Salaries for medium- and highly-skilled workers also rose but remained just below their pre-pandemic high points.
TRENDPOST: A University of Chicago study showed that 42 percent of those on unemployment benefits are making more through the benefits than they did at their previous jobs. And while there is a shortage of workers, there are also 8.4 million fewer jobs available since the onset of the COVID War.
Jobs Go Begging: The U.S. economy added a meager 266,000 jobs in April, in part because employers are unable to find workers.
About 4.6 million people who were working when the pandemic struck have not yet returned to the labor force, according to Bank of America.
Employers expect to see workers return as vaccine campaigns expand and succeed.
Uber and Lyft are offering incentives to attract more drivers, and U.S. factories have about 500,000 unfilled jobs.
Meanwhile, some companies are offering workers extraordinary incentives: Chipotle is offering to pay college tuition for workers after just four months on the job.
Although the percentage of U.S. adults either working or looking for work rose to 61.7 percent in April – the greatest proportion in 13 months – the figure is still at its lowest since 1977, when far fewer women held paying jobs.
“Over the next several years, the recent surge in retirements and long run demographic trends will… [make] it difficult for the labor force participation rate to return to pre-pandemic levels,” Michelle Meyer, Bank of America’s chief U.S. economist, noted in a recent research report.
The shortage is especially acute in manufacturing, which has 570,000 open jobs now as the pandemic ends and the economy begins to stir. Worse, the industry sees as many as 2.1 million unfilled slots by 2030, costing the sector $1 trillion in productivity over the intervening years, according to a new study by Deloitte and the Manufacturing Institute.
Three factors are robbing factories of workers:
- Manufacturing no longer is about pushing parts through a machine. Workers need advanced skills in math, computer use, and problem-solving, a skill set strikingly absent among high-school graduates
- Workers who have technical skills often opt for white-collar positions, which offer higher prestige, flexible work locales, and cleaner hands;
- Manufacturing work still is perceived by many as a low-status occupation, employers say.
- Those three factors translate to a shrinking talent pool of workers for manufacturers to draw from.
Finding qualified factory workers is 36 percent harder now than in 2018, respondents to a Deloitte study reported, and 77 percent expect to struggle to find and keep workers in the future.
TREND FORECAST: To attract more workers, wages will rise, which will, in turn, be another factor driving inflation higher.