WASHINGTON – (AP) – Hiring in the United States resumed in May, but was again slowed by struggles by many companies to find enough workers to keep up with the economy’s rapid recovery from the pandemic recession.
U.S. employers created 559,000 jobs last month, The Ministry of Labor said on Friday, an improvement from the small increase of 278,000 in April. Yet the gain fell far short of employers’ labor needs. The unemployment rate fell from 6.1% to 5.8%.
The speed of the rebound, fueled by substantial federal aid and increased immunizations, has created a disconnect between businesses and the unemployed: As businesses rush to add workers immediately, many unemployed are still holding back. Some of the unemployed are probably looking for better jobs than before the pandemic triggered many layoffs. Or they still lack affordable child care.
Others still fear contracting COVID-19 or have decided to take early retirement. And a temporary federal unemployment benefit of $ 300 per week, in addition to regular state unemployment assistance, has likely led many unemployed Americans to take the time to consider their options.
This mismatch between employers and job seekers led to a sharp slowdown in hiring in April, when companies created far fewer jobs than economists expected and far fewer than in March. The disconnection eased somewhat in May. But economists say it will likely persist until early fall, when schools reopen, COVID-19 wears off further and federal unemployment benefits end.
“There is a gap between the economy and the job market,” said Nela Richardson, chief economist at payroll company ADP. May’s job gains, she said, are “duller than one would expect given the strong economic growth.”
The May jobs report offered a number of signs that companies are pushing harder to find workers. They offer more money, on the one hand. Average hourly wages jumped for a second consecutive month, especially in the leisure and hospitality sector, which includes restaurants, bars, hotels and theme parks. Hourly wages for all workers in this industry, except managers, were 6.4% higher in May from pre-pandemic levels – a substantial gain.
And the number of unemployed people who say their jobs are permanently lost fell the most in May in five months. It’s an encouraging sign that companies are moving beyond simply recalling workers they laid off during the pandemic.
Yet many of those jobs are still poorly paid and unattractive to many Americans – people like Marcellus Rowe, who has been out of work since losing his $ 16 an hour job at the Metropolitan Atlanta Rapid Transit. Agency in November 2019.
Rowe, 29, says the only jobs he sees advertised for someone like him pay just over $ 9 or $ 10 for work in restaurants and small stores. This is not enough to cover her monthly rent of $ 1,000.
“I will continue to look for suitable work,” Rowe said. “I know that will happen eventually. What I cannot do is settle for an unsuitable and poorly paid job. ”
He gets by with unemployment benefits, bolstered by the federal supplement of $ 300 per week. But Georgia removes the federal allowance on June 26. Almost half of the states – all led by Republican governors – will cut extra aid starting this month. Many companies have blamed the federal benefit for discouraging some of the unemployed from taking work.
“It will be a real ordeal,” Rowe said, noting that he had already ditched the cable TV service to save money.
Labor Secretary Marty Walsh said on Friday that companies’ complaints about federal unemployment assistance were “a distraction” and noted that the number of people seeking unemployment assistance is steadily declining.
Eric Winograd, an economist at AllianceBernstein, an investment management firm, said there were still around 7 million people who were not looking for work – and therefore are not counted as unemployed – but who say in surveys governments that they want a job. This is about 50% more than before the pandemic.
“This is convincing evidence that there are a large number of workers who will return to work when they feel it is safe or when they are able to settle child care,” Winograd said.
For the moment, many big chains, including Amazon, Walmart, Costco and Chipotle, have increased the starting salary to try to attract more applicants. And the average workweek remained high last week, suggesting that companies struggling to hire are putting existing staff to work longer hours.
Some small businesses have also raised wages and taken other steps to fill jobs, but are still looking for more workers. National Church Residences, a Columbus, Ohio-based senior living center provider with 340 locations across the country, has steadily increased its minimum wage to $ 14.50 an hour over several years before the pandemic.
Danielle Willis, the company’s director of human resources, said the increases have helped attract staff. The company also provides health care and a 5% matching payment into a pension plan for its full-time employees, including nurse aides, property managers and maintenance workers. Yet the company of 2,700 people still has 300 open positions across the country.
Nationally last month, most of the job growth occurred in hotels, restaurants and bars, which gained 220,000 jobs. Retailers lost jobs for a second consecutive month. And despite a hot housing market, the construction industry shed 20,000 jobs, its second consecutive month of layoffs, likely reflecting supply shortages and soaring costs of building materials.
The economy grew in the last quarter at a robust annual rate of 6.4%, and economists are forecasting growth in the current quarter to reach a meteoric pace of 9% or more. All this growth, driven by higher spending, raised fears of inflation. But so far, it has mainly propelled the demand for labor.
Although the economy still has 7.6 million fewer jobs than before the pandemic, job openings at the end of May were nearly 26% higher than pre-pandemic levels, according to the website of the Indeed jobs. Government data shows that posted jobs are at their highest level since 2000.
Consumers open their wallets. In April, they increased their spending after a huge gain in March, fueled by the distribution of $ 1,400 stimulus checks. As more and more Americans feel comfortable staying in hotels and visiting places of entertainment, spending on services has jumped.
Becky Frankiewicz, president of the North American division of temporary staffing firm Manpower Group, said many of the firm’s clients were increasing salaries and benefits to try to attract more applicants. Some of these companies, especially in the manufacturing and warehousing industries, are also trying other tactics, like paying their workers weekly or even daily, rather than every two weeks. Manpower also encourages its customers to make same-day job offers rather than waiting.
About 60% of Manpower’s temporary workers leave their jobs before a temporary assignment ends, Frankiewicz said, mainly because they receive better offers.
“People have options,” she said. “Companies need to offer fast cash, fast hiring and great flexibility in the way they work. “
For now, however, there are signs that many unemployed people remain cautious about finding work.
Tony Sarsam, CEO of SpartanNash, a grocery distributor and retailer, on Thursday said in a conference call with investors that the company attended a career fair last month with 60 companies that had 500 jobs to be filled.
“Only four candidates came forward,” Sarsam said.
AP writers Paul Wiseman in Washington and Anne D’Innocenzio in New York contributed to this report.
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