Jump in jobs market catches employers, economists off guard.
Improving weather, stimulus and a surge in vaccinations give boost
A resurgent job market is creating more opportunities at a faster clip than many economists and employers expected.
What’s more, too few people are applying for positions that are reopening, and that’s setting up a battle for talent. Restaurants and hotels are raising wages, offering bonuses for worker referrals or luring people from other states to cope with the shortage.
Many data watchers have been caught off guard as improving weather, stimulus and a surge in vaccinations converge to boost the economy. Nonfarm payrolls rose by 916,000 last month, blowing away economists’ median estimate of a 660,000-job gain. Meanwhile, a measure of service-industry activity released this week saw the fastest growth on record in March, exceeding the highest estimate in a Bloomberg survey.
On Florida’s Captiva Island, Doug Babcock is considering hiring a temporary labor firm to fill roles at ‘Tween Waters Island Resort and Spa and other resorts on neighboring Sanibel Island. Historically, workers have willingly driven up to an hour from the mainland for the promise of yearround work. This year, applicants are grilling him about drive times and taking jobs closer to home.
“It’s almost like the staff is interviewing you,” said Babcock, who’s boosted starting pay for dishwashers by $2 to $3 recently.
Economic data are rebounding better than expected because of a “superfecta” of positives colliding at once, Michael Skordeles, a senior U.S. macro strategist at Truist Financial Corp., said in an April 2 note.
“The resulting horsepower lifting the economy is unparalleled, particularly for jobs in the coming months,” he wrote.
Economists like Skordeles point to improving weather, more states lifting business restrictions, the vaccine roll-out and President Joe Biden’s $1.9 trillion stimulus bill as drivers.
Even before states like Texas and Mississippi reopened last month, job openings were surging _ hitting a two-year high in February, data showed Tuesday.
“I think we’re getting to another phase in the reopening and that’s leading to a spurt in economic activity,” said Ryan Sweet, head of monetary policy research at Moody’s Analytics. And while economic data can sometimes send mixed signals, “this time around, we’re getting strong signals that the economy is set to bounce back,” he said.
To get ahead of the competition for talent, Olive Garden parent Darden Restaurants is boosting pay to ensure all workers, tipped and untipped, earn at least $10 an hour initially and $12 by January 2023.
Many Applebee’s restaurants are offering $3,000 bounties for manager referrals after the first six months, while some Arby’s locations are paying $500 referral bonuses up front.
The ripple of pay increases — while anecdotal and still tepid — will likely deepen the debate about whether the U.S. economy can post a rebound this powerful without triggering an inflation spiral.
“Our restaurants are literally busier than they’ve been in decades,” said Greg Flynn, whose Flynn Restaurant Group owns 2,355 restaurants including Applebee’s, Panera Bread, Taco Bell and other brands.
The worker shortage is especially apparent at Southern restaurants and hotels that have seen a spring-break surge of activity in states that reopened earlier than most, on top of a wave of spending from the $1,400 federal stimulus payments that Congress passed in March.
In Southern states including Alabama, South Carolina and Florida, growth in consumer spending since January 2020 far exceeds the national average, according to data from Opportunity Insights.
“Never have we ever had this many positions open,” said Francesco Balli, cofounder and co-CEO of Grove Bay Hospitality Group that owns eight restaurants in the Miami area.