In April, an expected hiring boom crashed with employers merely adding a few thousand jobs – a sharp miss from the projected number by Wall Street, despite the growing shortage of available workers.
#JobsReport expectation vs reality ⬇️ pic.twitter.com/6WmGFcUktv
— Dave Joyce (@RepDaveJoyce) May 7, 2021
On Friday morning, the Labor Department stated in its monthly payroll report that the unemployment rate unexpectedly rose to 6.1%. Although this number is still below the April 2020 peak of 14.7%, it is still twice higher than the unemployment rate on the pre-crisis level.
Economists surveyed by Refinitiv expected the report to show that unemployment fell to 5.8% and the economy added 978,000 jobs.
There are still over 8.2 million jobs fewer than there were last February before the pandemic started.
JUST IN – U.S. Chamber of Commerce reacts to disastrous April jobs report: "End the $300 weekly supplemental unemployment benefit"
— Disclose.tv 🚨 (@disclosetv) May 7, 2021
Businesses are still reporting difficulty onboarding new workers despite the accelerated vaccine rate, trillions of government stimulus, and easing business restrictions.
According to the estimate provided by a recent Bank of America analyst 4.6 million workers exited the labor force during the pandemic. Only half of this number are expected to rejoin by the end of the year.
Meanwhile, companies blame the unemployment benefits that were provided to workers during the pandemic. Such as the $1.9 trillion stimulus package that Biden signed into law in March increased unemployment aid by $300 a week through Sept 6, 2021, and included a third $1,400 payment for millions of Americans.
According to Bank of America, what this means is that, Americans who earns below $32,000 before the pandemic began would be better of in the near-term collecting that financial aid than working.
Biden’s 2 proposed bills will cost more than the entire Pentagon budget for FIVE yrs
Biden admin has already spent almost $2 trillion in less than 100 days, twice what we’ve spent in 20 yrs on the military in Afghanistan +w plans for another $4 trillion
— ChuckGrassley (@ChuckGrassley) May 3, 2021
The Biden administration is at the same time, pushing toweards passing another $4 Trillion spending, most of which would still be geared towards boosting low and middle-income families.
Mark Hamrick, a senior economic analyst at Bankrate said, “We’ve known for some time now that there are tensions or mismatches between the demand for workers and a large number of job openings and the large number of unemployed individuals.: Hamrick added, “Many employers report struggling to find available workers. Supply constraints are also limiting further improvement in output.”
On the other hand, the leisure and hospitality industry, one of the hardest hit sector accounted for the bulk of the hiring gains, adding to over 331,000 workers. However, the industry still 2.9 million workers shy of what it was one year ago.
Local government education on the other hand, increased its payroll by 31,000 as children started to return to in-person learning. Social assistance on the other hand, rose by 23,00 while financial activities increased by 19,000.
But employment in professional and business services tumbled by 111,000 in temporary help. Support services dropped another 15,000 positions. Manufacturing lost 18,000 workers, and courier help fell by 77,000.
Someone tell Joe the unemployment numbers went UP https://t.co/7nncNFgeNT
— m/ -=EdVT=- m/ (@CargoL1fe) May 7, 2021
Robert Frick, corporate economist at Navy Federal Credit Union said, “We knew friction was coming in hiring, but no one expected it would come so soon,” Frick added that there are several reasons for the limited number. This includes child-care concerns and fear of contracting the virus.
Frick said, “The hopeful news is Americans have hundreds of billions of extra dollars to spend, and while it evidently will take longer to rebuild many industries, the money is ready to be spent to bring the economy back to normal and re-employ millions of Americans.”
Over the past month, the Federal Reserve struck at a more positive tone. However, it maintained that the coronavirus will still continue to dictate the course of the nation’s economy. Policymakers at the U.S. central bank have said they are dedicated to achieving full employment and having inflation consistently run above their 2% target, but they raise interest rates.