Employers added a paltry 266,000 jobs in April, hundreds of thousands below what most experts had predicted.
The number for March was revised downward from its previous 916,000 to 770,000, according to the report from the Bureau of Labor Statistics. February’s number, however, was revised upward to 536,000 from its prior reading of 468,000. The unemployment rate, meanwhile, rose a notch to 6.1%.
Gains in the hospitality and local government were offset by declines in temporary help and courier and messenger services. Economists had predicted a number close to or above 1 million.
Political Cartoons on the Economy
“Given where we are in the economic recovery process, we can’t expect every jobs report to come in as fast and furious as the one we had in March, ” said Steve Rick, chief economist at CUNA Mutual Group. “While this jobs report was a bit of a disappointment, with rapid vaccine rollout and ramped up reopening efforts, we can expect the economy to continue to make steady recovery progress from here on out.”
The report seems at odds with other recent strong data on the labor market, with private sector payroll firm ADP reporting 742,000 jobs added and the Labor Department’s weekly first-time filings for unemployment coming in below 500,000, the lowest reading since March 2020 as the coronavirus was starting to take hold in the country. It also seems out of kilter with anecdotal accounts from businesses, which have reported difficulty finding workers.
With more businesses reopening and more than half of Americans having received at least one dose of a coronavirus vaccine, the economy is gaining strength and is poised to have its best year of growth in decades.
One challenge will be to match jobs with those who have been unemployed, perhaps for quite a while, during the pandemic. Companies are already reporting difficulty finding workers even with millions unemployed, and some say the stimulus checks from the federal government and enhanced unemployment benefits have made work less appealing to some.
“It’s been a long and difficult path for the restaurant industry and many have had to find other means of employment amidst the pandemic,” says Dirk Izzo, general manager of NCR Hospitality, which provides technology support to the industry. “It might be tough to ramp up staff to meet rising demand levels on a parallel track. It will be interesting to explore new pathways to look at staffing through a lens of humanity and technology.”
Fortunately, worker productivity is rising, accelerating at a 5.4% clip in the first quarter, above predictions, the Bureau of Labor Statistics reported Thursday. That means firms can produce more with the same amount of, or fewer, workers which will help keep labor costs from ballooning.
“The post-pandemic labor market will be highly competitive,” says Michael Hansen, CEO of Cengage, which helps train employees for careers that often do not require four-year degrees. “While there are more than 7 million open jobs in the U.S. today, fresh college graduates will be vying for jobs alongside millions who lost their job or paused career searches during the pandemic.”
At Adecco, a staffing agency, clients are already feeling pressure to raise wages, says Amy Glaser, senior vice president. They are also seeing workers shift from jobs in hospitality and the automotive industry to jobs in logistics, warehousing and transportation that are paying more.
“Literally, in the last eight weeks we’ve seen significant spikes” in wages, Glaser says, “specifically in blue-collar jobs.” Companies are raising pay in some cases by $2 to $9 an hour.
Separately, a survey of small businesses by Kabbage, an American Express company, released Thursday found 85% reported being fully open last month, an increase of 51% since the first survey in February.
“It’s heartening to see the pressures on small businesses are slowly easing as consumer confidence heightens and sales continue to restore, but the smallest of businesses still need our support,” said Kabbage co-founder Rob Frohwein. “These companies have carried the brunt of the economic crisis and we can only claim recovery when they can too.”