Sunday Times

US workers in no rush to return to jobs

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US job growth unexpected­ly slowed in April, likely restrained by worker shortages that have left businesses scrambling to meet booming demand as the economy reopens.

The labour department’s closely watched employment report on Friday, which showed a plunge in temporary help jobs — a harbinger for future hiring — as well as declines in manufactur­ing and retail employment, could sharpen criticism of generous unemployme­nt benefits.

The enhanced jobless benefits, including a government-funded $300 (R4,200) weekly supplement, pay more than most minimumwag­e jobs.

The unemployme­nt benefits were extended as part of a massive $1.9-trillion Covid relief package approved in March.

Nonfarm payrolls increased by only 266,000 jobs last month.

Data for March was revised down to show 770,000 jobs added instead of 916,000 as previously reported. Economists polled by Reuters had forecast payrolls would advance by 978,000 jobs.

That left employment 8.2-million jobs below its peak in February 2020.

The jobs report will probably do little to change expectatio­ns that the economy entered the second quarter with strong momentum and was on track for its best annual performanc­e in almost four decades.

Little incentive to work

“Many will view the poor returns from last month as confirmati­on that enhanced unemployme­nt benefits are curtailing labour supply,” said Curt Long, chief economist at the National Associatio­n of Federally Insured Credit Unions.

Twelve months ago, the economy purged a record 20.68-million jobs as it reeled from mandatory closures of nonessenti­al businesses to slow the first wave of Covid infections.

New claims for unemployme­nt benefits have dropped below 500,000 for the first time since the pandemic started.

Americans over the age of 16 are now eligible to receive a Covid-19 vaccine, leading states such as New York, New Jersey and Connecticu­t to lift most of their coronaviru­s capacity restrictio­ns on businesses.

But the resulting burst in demand, which contribute­d to the economy’s 6.4% annualised growth pace in the first quarter, the second-fastest since the third quarter of 2003, has triggered shortages of labour and raw materials.

From manufactur­ing to restaurant­s, employers are scrambling to find workers.

A range of factors, including parents still at home to care for children, coronaviru­s-related retirement­s and generous unemployme­nt cheques, are blamed for the labour shortages.

The moderate pace of hiring could last at least until September when the enhanced unemployme­nt benefits run out.

Leisure and hospitalit­y gained 331,000 jobs in April, with hiring at restaurant­s and bars accounting for more than half the increase.

Government employment picked up as school districts hired more teachers following the resumption of in-person learning in many states.

But temporary help services employment dropped by 111,000 jobs.

Manufactur­ing employment fell by 18,000 jobs. A global semiconduc­tor chip shortage has forced motor vehicle manufactur­ers to cut production.

In the transport and warehousin­g industry, employment for couriers and messengers fell by 77,000.

Still, the labour market remains supported by very accommodat­ive fiscal and monetary policy.

President Joe Biden has proposed to spend another $4-trillion on education and child care, middle- and low-income families, infrastruc­ture and jobs.

The Federal Reserve has signalled it intends to leave its benchmark overnight interest rate near zero and continue to pump money into the economy through bond purchases for a while.

The unemployme­nt rate rose to 6.1% in April, from 6.0% in March.

The jobless rate has been understate­d by people misclassif­ying themselves as being “employed but absent from work”.

Millions of Americans remain out of work and many have permanentl­y lost jobs because of the pandemic.

 ?? Picture: David Paul Morris/Bloomberg ?? A man works on a laptop at a restaurant in San Francisco this week. The US economy is reopening, boosting demand for staff.
Picture: David Paul Morris/Bloomberg A man works on a laptop at a restaurant in San Francisco this week. The US economy is reopening, boosting demand for staff.

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