June 7, 2021
The April 2021 jobs report may be the most disappointing of all time.
Analysts expected the U.S. to add a million new jobs, but it was a paltry 266,000. The mismatch between consensus expectations and reality was the largest since 1998. Worse yet, the U.S. economy still has about 8 million fewer jobs than before the pandemic.
It doesn’t seem to make sense.
Labor demand is strong – 44% of small business owners have open positions they can’t fill, which is 22% above the 48-year average. With 10 million people unemployed and more than 16 million people claiming unemployment benefits, why is it so hard to hire?
Many blame enhanced unemployment benefits ($300 extra per week). Observers speculate people are staying home until benefits expire or they’re holding out for higher wages. We may also see wage inflation from enticing workers to fill open jobs.
Another reason could be closed schools or hybrid learning. Many parents, particularly mothers, can’t go back to work full-time until schools are fully reopened. Fear of COVID-19 may be playing a part too.
A third possible reason is skill mismatches. Many jobs require skills that aren’t attained quickly or easily. Some companies will train, though the preference is for experienced workers to hit the ground running.
Lastly, it’s conceivable more people are working “under the table” for cash. It’s not unfathomable for a contractor to ask for cash payments because workers want to be paid in cash to protect the unemployment benefits they may be collecting, despite restarting work. Of course, this is fraud, though the more creative may label it at do-it-yourself Universal Basic Income, or DIY UBI. Either way, it’s a dangerous game and perhaps is one of many reasons we have nationwide labor issues.
However, I suspect time will heal these wounds.