Audio: Are Unemployment Benefits to Blame for Dismal Jobs Report?
The American job market hit a slow down in April, going against economists predictions and causing debate as to what the best steps are for economic recovery moving forward.
U.S. employers added 266,000 jobs in April, the Bureau of Labor Statistics reported Friday. This gain is a drop from 770,000 jobs in March and much lower than economists predictions of one million.
In a bright spot, the unemployment rate rose slightly from 6.0% in March to 6.1%, a sign that more people are coming back to the labor force.
Economists predicted a major growth in jobs for April, citing an increase in vaccinations, continued government aid and easing on businesses COVID-19 restrictions, but that did not happen. Instead, the slow down in jobs growth gave ammunition to business people and some economists who say the generous jobless benefits in the Biden aid package are a factor deterring people from looking for work.
“Research using Glassdoor in the past has shown that more generous unemployment benefits can reduce the intensity with which people look for jobs, meaning they apply to fewer jobs,” said Daniel Zhao, senior economist at Glassdoor.
The executive vice president and chief policy officer of the U.S. Chamber of Commerce Neil Bradley agrees, and sent out a statement Friday morning. He said the $300 weekly unemployment benefits are a route cause of the dismal jobs report, and need to end.
“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” Bradley said in the statement. “One step policymakers should take now is ending the $300 weekly supplemental unemployment benefit.”
President Joe Biden made a statement Friday defending his American Rescue Plan.
“Some critics said we didn’t need the American Rescue Plan, that this economy would just heal itself. Today’s report just underscores, in my view, how vital the actions we are taking are,” Biden said. “Our efforts are starting to work, but the climb is steep, and we have a long way to go.”
Beth Ann Bovino, chief U.S. economist at S&P Global, said unemployment benefits may be a slight factor in businesses struggling to find workers, but it shouldn’t be the main focus.
“There is still concern about the variance of the virus. Vaccinations, while we’re seeing a lot of promise, still have not met a number of people in the workforce. Also, there’s still a number of children that are either hybrid or not fully in school. I think that’s another factor; a need for childcare,” Bovino said.
Despite complaints, especially from restaurants, that they can’t find enough workers, leisure and hospitality jobs increased by 331,000, the most of any sector. Still, these industries remain 2.8 million jobs below their prep-pandemic level. Economists wonder if the growth in this sector will continue moving forward.
“Leisure and hospitality is one of the sectors we point to is poised for a rebound. When is it going to get back to pre-pandemic levels? That’s going to depend on a lot of consumer behavior,” said Nela Richardon, chief economist at ADP. “Will people feel comfortable going on planes? Will they travel internationally again? Will they stay at an Airbnb?” Richardson said this will all be determined by where the pandemic goes and how it allows people to spend moving forward.
Right now, consumer spending continues to rise. The rise in demand of manufactured goods is putting pressure on businesses to hire more workers to meet the demand, but it is in the warehouse sector that businesses seem to be struggling to hire these workers.
“There are businesses across the country with help wanted signs. It’s not possible to hire enough people to produce what Americans need,” said chief economist at Action Economics LLC, Michael Englund.
Unlike Jobs in sectors like hospitality, warehouse jobs saw a decrease of 77,000. Workers in this sector are responsible for filling e-commerce and other consumer spending orders, which has recently seen a major increase in demand. Englund said the decrease in jobs in this sector is due to there not being enough people looking for work, where the work is needed.
“Why doesn’t a former waitress from the Bronx take a hydraulic fracturing job in West Texas? We’re having trouble finding workers who generally are not located in or interested in the industries where the growth is occurring,” Englund said.
Other sectors saw minor improvements in April, but are nowhere near where they were before the pandemic. Employment in local government education increased by 31,000, but is 611,000 lower than in February 2020.
Matthew Henry, 28, is an aspiring teacher from central New York. He is also one of the millions of Americans still struggling to find work.
“I was constantly told throughout my time in college that I would ‘easily’ find a job because ‘the world always needs teachers’,” Henry said. “We are constantly told that the world ‘needs us’, so where are the jobs?”
Henry has been looking for a job as a history teacher for over a year. He won’t stop looking out of a need to pay off his student loans and everyday expenses.
“Everyday it gets harder and harder to get ahead and it’s even harder when you can’t find a job that you’re certified in or have a degree in,” Henry said.
Some people have been able to find a job during the pandemic. Hannah Newman from San Francisco California is almost 30 years old and is in the opposite position of Henry in the same sector. Newman started her new job at Guild Education, a for profit ed-tech company, in April. She said her process of finding this job was not totally hindered by the pandemic.
“Job searching during the pandemic has pluses and minuses,” Newman said. “Working from home, you have a lot more flexibility with your time. I was fortunate to be able to be picky about what was next for me. I spent a lot of time looking and talking to people. But this job was not easy to get.”
It took Newman over four months to land this job. She is grateful she was able to land her dream gig during the pandemic, and unlike Henry, she feels secure about her place in the workforce.
“I’m really lucky to be joining a big and growing organization where I think there’ll be lots of opportunities to continue to grow within it. I plan to stay for quite a while,” Newman said.
Even though the jobs numbers in April are nowhere near initial predictions, economists don’t think there is immediate need for concern. They signal a fundamental problem with the economy and that it may recover more slowly than anticipated.
“I am still optimistic that as the economy reopens, we will see significant job growth. But it does temper my optimism for the recovery in the short term,” Zhao said.