U.S. job growth unexpectedly slowed in April, likely curbed by shortages of workers and raw materials as rapidly improving public health and massive government aid fueled an economic boom.
The Labor Department’s closely watched employment report on Friday, which showed a plunge in temporary help jobs – a harbinger for future hiring – as well as decreases in manufacturing, retail and courier services employment, sparked a heated debate about the generosity of unemployment benefits.
The enhanced jobless benefits, including a government-funded $300 weekly supplement, pay more than most minimum wage jobs. The benefits were extended until early September as part of a $1.9 trillion COVID-19 pandemic relief package approved in March. Montana and South Carolina are ending government-funded pandemic unemployment benefits for residents next month.
Economists say some workers could still be fearful of returning to work even as all adult Americans are now eligible to receive COVID-19 vaccinations. Others also cited problems with child care as in-person classes remain limited in many school districts. Labour and input shortages have been well documented by business surveys.
“The employment gain is understated in part because of the generous largess from Washington,” said Sung Won Sohn, a finance and economics professor at Loyola Marymount University in Los Angeles.
“Short-staffed restaurant owners are working overtime, truck drivers are impossible to find even after a hefty increase in hourly wages and loading docks at warehouses are keeping trucks idle as there aren’t enough workers.”
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 U.S. Chamber of Commerce urged the government to scrap the weekly unemployment subsidy, but the White House dismissed complaints the generous unemployment checks were causing worker shortages.
“It’s clear that there are people who are not ready and able to go back into the labour force,” Treasury Secretary Janet Yellen said. “I don’t think the addition to unemployment compensation is really the factor that is making a difference.”