All the loose talk about businesses struggling to find workers, employees quitting at a record pace, and people on unemployment benefits not wanting to work makes it seem like the U.S. isn’t creating many new jobs.
But it is.
The U.S. is not adding jobs as fast as it lost them during the early stages of the pandemic last year, to be sure. Yet the economy has still created an average of 535,000 new jobs in each month in 2021.
Wall Street is looking for a somewhat bigger increase in new jobs June when the monthly employment report is published next Friday.
Economists polled by The Wall Street Journal predict the U.S. generated almost 700,000 new jobs in June. The unemployment rate is expected to slip to 5.7% from 5.8%.
That’s pretty good, but still not good enough. At that rate, the number of people who are working in the U.S. would not return to pre-pandemic levels until the fall of 2022.
The good news is, most companies are eager and willing to hire, especially at airlines, hotels and other service sector businesses that bore the brunt of the job losses during the pandemic.
Job openings soared in April to a record 9.3 million and by some measures exceed the number of unemployed workers.
What’s holding back job creation, economists say, are lingering fears of the coronavirus, a wave of early retirements, still-limited options for day care and elderly care, and generous unemployment benefits.
“Hiring would be even stronger if workers weren’t so hard to find,” said senior economist Sal Guatieri of BMO Capital Markets.
Most of these hurdles are likely to fade by the fall.
New Covid cases have fallen to fresh lows, for one thing, as more people get vaccinated. Schools and daycare centers are preparing to fully reopen. And the extra unemployment benefits provided by the federal government will be phased out in September.
Some economists think hiring could boom sooner than that, perhaps even in June.
They point out that some 26 states now plan to end extra federal benefits by early July, a move that could affect up to 4 million people. Many if not most will probably have to get a job soon in order to pay their bills.
Many businesses have also boosted pay to attract workers and some have gotten very creative with benefits and other incentives. If they don’t hire enough people, they’ll miss out on some sales and profits and give their competitors a leg up.
Perhaps the most telling part of the June employment report won’t be the number of jobs created. It will be how many people rejoined the labor force.
People are considered part of the labor force if they either have a job or are actively seeking one.
The size of the labor force has only grown by about three-quarters of a million so far this year — that’s disappointingly slow. And it’s still 3.6 million below its pre-pandemic peak of 164.6 million.
Some of the people who left the labor force may have left it for good. Studies estimate that perhaps as many as 1 million or more workers in the late 50s or early 60s may have retired early, a decision made easier by a record stock market boom.
That still leaves a pool of millions of people who could eventually rejoin the labor force — and give the economy another burst of momentum once the federal stimulus money is long gone.