The U.S. economy added just 266,000 jobs in April, a disappointing month of growth that fell well below economists’ estimates despite declining virus caseloads and increased vaccine distribution around the country.
The news increased political pressure in Washington amid concerns about whether a labor shortage, reported in some pockets of the economy, is slowing down the recovery. The White House rejected that notion Friday, calling for patience and saying it will take the economy many months to recover from last year’s trauma.
“More help is needed. … We’re still digging out of an economic collapse that cost us 22 million jobs,” President Biden said. “Let’s keep our eye on the ball.”
The 266,000 jobs added in April represent a sharp drop-off from the 770,000 jobs gained in March.
Millions of Americans still have not returned to the workforce since massive layoffs in March and April of 2020, and the March jobs report had seemed like a confirmation that the economic recovery that had stalled last year was revving up again.
“Given the robust expectations of over a million jobs gained, it’s hard to label this anything but a disappointment,” said Joseph Brusuelas, chief economist at the consulting firm RSM.
The pace of the recovery is a subject of intense focus, as the country remains more than 8 million jobs in the hole after losing 22.3 million jobs in the first two months of the crisis.
At April’s rate of growth, the economy wouldn’t regain those 8 million jobs until the end of 2023.
The increase in April was driven by gains in leisure and hospitality, which added 330,000 jobs, more than half of those at restaurants and bars. The sector overall still has 2.8 million fewer jobs than it had before the pandemic.
Those gains were offset by large declines in temporary help services and couriers and messaging services, and smaller drops in sectors such as manufacturing and retail. Employment in construction was relatively unchanged — a surprise to economists who expected bigger gains amid the reopening and housing boom.
Some businesses have been complaining to the White House and lawmakers that they are having a hard time recruiting workers, particularly for low-wage, hourly jobs.
Average hourly wages rose about 21 cents across the country, data that the Bureau of Labor Statistics suggested reflected increasing demand for labor.
But Brusuelas said he did not believe that the report was the result of a labor shortage — or supply chain issues that have affected some industries.
“The numbers don’t support that,” he said. “It shows businesses are responding to demand that is currently outstripping the pace of the economic reopening. It’s hard to reintegrate all of the workers back into the labor market at one time.”
Brusuelas noted that the labor force participation rate of women ages 25 to 54 remains well below pre-pandemic levels, reflecting the pressures on mothers and caregivers.
“Child care is not readily available, and schools are not reopen,” he said. “Until they return you’re going to see that friction in the labor market continue.”
Constance L. Hunter, the chief economist at KPMG, said she thought the report reflected a complicated mix of labor market issues due to the pandemic.
“It’s child care, maybe health concerns, it’s maybe unemployment insurance, and it’s maybe the fact that people are demanding a higher wage,” she said. “This is a report that’s noisy, and it’s always been noisy. I’m hesitant to look at one month.”
There were some positive indications in the new government report, however.
The number of people saying they were employed part-time because they couldn’t find enough work dropped by 583,000 in April, indicating that many people were able to increase their hours at work.
Republicans have been using questions about the labor force to criticize the stimulus package passed by the White House and Congress in March, saying it is acting as an incentive for people to not return to work. Biden administration officials have countered that the $1.9 trillion package provided vital assistance to millions of Americans and has helped the economy grow.
Arkansas on Friday joined two other Republican-led states, Montana and South Carolina, in moving to cancel federal unemployment benefits in recent days, blaming these payments for hampering the return to work. The business lobby has echoed those concerns as well, with the U.S. Chamber of Commerce using the disappointing jobs report to call for the end of the $300-a-week unemployment supplement that the federal government currently provides.
Some economists, though, believe that the claims of a labor shortage solely due to unemployment insurance are overblown, and say that workers have other considerations amid the complicated dynamics of the pandemic.
A significant portion of workers, for example, are still juggling child care, with schools not open full-time in many parts of the country. Health concerns remain an issue for some, even with the rise in vaccinations, until caseloads sink even further. And jobs at companies like Amazon that pay $15 an hour have exerted competitive pressure on employers looking to hire hourly positions below that wage while offering little in the way of benefits.
(Amazon chief executive Jeff Bezos owns The Washington Post.)
There have been other positive signs: Air travel remains well below pre-pandemic averages but has been increasing steadily since January. Spending at restaurants, bars and hotels has also been ticking up. New unemployment claims have fallen to pandemic-era lows for the past four weeks, dropping below 500,000 for the first time last week. And job postings have grown significantly.
More than 1 million people have returned to work in the past two months. They include Veronica Esparza, 35, a custodian at Disneyland’s Grand Californian Hotel & Spa, who was called back in advance of the hotel’s reopening last week for the first time in 13 months.
“My kids were so happy that their mom was going back to work,” said the mother of three from Covina, Calif.
For Esparza, it was the culmination a year of hardship.
The family was able to squeak by with the help of family support, unemployment insurance and food banks after Disneyland shut down. Esparza came down with covid-19 late last year, she said.
And despite choosing not to get vaccinated, she has been excited to return to work because of the safety agreements that her union, Unite Here Local 11, negotiated with the company, she said.
Businesses, too, have been ramping their operations back up.
Bill Winkler, the owner of Peoria Charter Coach, a busing company in Illinois, said the business is back on its feet after coming to a halt earlier in the pandemic.
In April, the company did 40 percent of the sales it recorded during the same period in 2019. But that was dramatically more business than it took in during the same period of 2020. Winkler no longer fears having to close his business, which has been in his family for three generations but is still operating in the red.
“We’re not out of the weeds yet,” he said.
Public health restrictions from the state in the face of stubborn caseloads remain an obstacle to his business, Winkler said. “We’re moving to the right direction, but I don’t see [sales] getting past 50 percent until the start of the school year.”
The company has staffed up to about 90 employees, an increase from last year but still below the 130 people it employed before the pandemic.