Wall Street professionals and economists were predicting that April’s jobs report would show that the United States economy created over one million news jobs. Then, when the U.S. Department of Labor released the actual numbers, it was only about 25% of what they expected.
There was an overwhelming sense of disappointment and dismay. Experts started to wonder what went wrong. States reopened, vaccines were administered to millions of Americans and trillions of dollars were put into the economy to stimulate growth by the federal government. Record levels of 7.4 million jobs listings were posted online. This was supposed to be good. What happened?
After taking a deep breath and reassessing the situation, there are valid reasons for the glaring disparity between the expected number of new jobs created and the reality. Some of the blame is being put on the scarcity of workers. Although millions of jobs have been posted online, companies aren’t able to recruit and onboard people.
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Here’s what’s happening:
Parents are finding it exceedingly hard to juggle their jobs, provide child care and homeschool their children, as many public schools shut down in-classroom studies. Having to choose between working, searching for a job or taking care of their kids, many mothers elected to opt out of the job market.
Although millions of Americans have been vaccinated, there is still a palpable fear of catching Covid-19. People would rather not work than run the risk of catching and spreading the virus. In a survey of food-service workers, conducted by One Fair Wage and the Food Labor Research Center at the University of California, Berkeley, 75% of the respondents said low wages and tips was the impetus to quit their jobs during the pandemic. The survey showed that workers’ concerns about Covid-19 and “increased hostility and harassment from customers, often related to wearing masks, in addition to long-running complaints of sexual harassment” led to them leaving their jobs. Due to these types of issues, some workers not only quit, they decided not to return. Instead, they wanted to pivot to different careers outside of retail, restaurants and other frontline jobs.
Some older workers, perhaps due to ageism, couldn’t find jobs, felt frustrated and left the job market altogether. Others, who were more fortunate, benefited from the booming stock market and increases in real estate and home prices, contributing to about 1.2 million older Americans deciding to cash in their chips and take an early retirement.
Employers, particularly in the restaurant and hospitality industry, have reported scant responses to their help-wanted ads. Some of these managers contend enhanced $300 unemployment benefits, along with stimulus checks and other government aid programs, are making it attractive for potential workers to stay on the sidelines. Business owners say the current system makes it too convenient for people to collect a check and not have to work. Unemployed folks would point out that it’s not worth it to take a potential health and safety risk for only a low wage. This, in part, has led to about 16 million people still receiving some form of unemployment benefits.
White House spokeswoman Karine Jean-Pierre said about the matter, “We recognize that the labor supply has been affected by the pandemic, [but] are seeing little evidence though that enhanced unemployment benefits are currently affecting Americans’ willingness to work.”
It’s reasonable that if employers need workers so badly, they should raise pay. This is also not happening. ADP chief economist Nela Richardson said, “The full sentence is ‘I can’t find workers at the wage I am willing to offer.’ Full stop.” Richardson contends that if you pay them well, “you can find workers.”
While this is easy to say, for many companies, particularly mom-and-pop businesses, which represent a significant amount of jobs, they don’t have huge financial resources—like Amazon, Apple and Facebook—and simply can’t afford it. Small and midsize businesses rely upon razor-thin profit margins and don’t have the ability to increase salaries. We’ve already seen tens of thousands of businesses permanently close during the pandemic, as they couldn’t afford to wait things out.
There is some hope on the horizon. Looking out to September, there is a belief that schools will reopen, relieving the pressure on parents, the enhanced unemployment benefits will be gone and more Americans vaccinated. This should make people who pulled out of the labor force come back and start interviewing. Hiring will return and the employment levels will improve. As more people have jobs, they have money to spend, which will help the economy and, in turn, would create more jobs. Hopefully, we’ll see the 1 million new jobs created that we had hoped for in April.