The April Jobs Report was released on Friday 5/7, and it was shockingly underwhelming, causing analysts to question the recovery’s momentum. Employers added only 266,000 jobs – which would be fantastic news in any other year, but massively underperformed expectations of the predicted gains of 1 million jobs. The plot thickens.
·Overall unemployment rate actually increased to
6.1%from
6.0% in at the end of March
·The rate for college-degreed workers aged 25+ dropped to
3.5%from
3.7%in March
·
266,000jobs were added in March, with the most growth (331,000 jobs) coming from the leisure and hospitality sectors
·Revisions to February and March figures showed that
1,306,000jobs were added during those two months, resulting in a net negative adjustment of
78,000compared with the figures that were originally reported
This month’s labor report highlights an interesting nuance of how unemployment is reported in the U.S. Although the economy added 266,000 jobs, the unemployment rate increased – which seems counterintuitive on the surface. However, this is because the unemployment rate is based on the individuals who are active in the labor force (i.e., actually looking for work). That population grew by 430,000 last month, more than offsetting the gains in the number of jobs.
April’s numbers are truly puzzling. Despite record economic growth, the rebound in the labor market seems to be struggling, and some economists are blaming widespread shortages. As Greg Ip wrote for
The Wall Street Journal, “Auto manufacturers, who have idled assembly lines because of semiconductor shortages, cut jobs by 27,000, or 3.7%, and construction employment, constrained by shortages of lumber and other supplies, was flat. Robust wage gains also suggest supply was more of a culprit than weak demand: Private hourly earnings jumped 0.7%, and this was not because higher paid occupations grew faster. Quite the opposite: Earnings rose just 0.6% in manufacturing but 1.4% in retail trade and 1.6% in leisure and hospitality.”
Even more puzzling is that anecdotal evidence suggests that, despite the increase in unemployment, U.S. employers continue to report difficulty in finding workers. In an interesting think piece from the Initiative for Policy Dialogue, Heidi Shierholz argues that the likely cause of this mismatch boils down to the fact that employers are not willing to boost wages enough to attract suitable candidates. “Employers post their too-low wages, can’t find workers to fill jobs at that pay level, and claim they’re facing a labor shortage. Given the ubiquity of this dynamic, I often suggest that whenever anyone says, ‘
I can’t find the workers I need,’ she should really add, ‘
at the wages I want to pay.’” You can find the full article
here.
As the above quote highlights, it’s critical that employers understand labor market dynamics when attempting to attract and retain talent. I’d be happy to provide a free copy of Robert Half’s salary guide, which is an incredibly useful tool for benchmarking your current staff or posting a new role – just send me a note in reply to this email and I can send right away.
As always, please let me know if there’s anything we can do to assist from a personnel standpoint – whether it’s direct hire, temp-to-hire, contractor or consultant, I’d be more than happy to help.
Hunter Lent, CPA
Client Service Director
Phone: (419) 297-5841
Click here to book a meeting with Hunter Lent
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