But that industry and the economy overall remain deeply in the hole. Across the economy, there were about 5 percent fewer jobs in May than existed in February 2020, the last month before the pandemic began; in leisure and hospitality, the jobs deficit is 15 percent.
Not long ago, economists were predicting job growth of closer to a million positions per month, given the rapid reopening of pandemic-affected businesses around the country. These businesses are indeed ramping up, and seeking workers, but a lot of their job openings appear to be going unfilled.
Official data on vacancies come out with a lag — the most recent numbers are from March — but they show the highest number of job openings since the government began keeping records two decades ago. A survey from the National Federation of Independent Business found that in May 48 percent of small-business owners said they had unfilled positions. That was the fourth consecutive month setting a record high in responses to this question; it is also 26 percentage points greater than the average reading over the past five decades (22 percent).
Even more concerning, the U.S. labor force — that is, the share of people who are either working or actively looking for work — shrank a little in May, the Bureau of Labor Statistics data show. There are still about 3.5 million fewer people in the labor force than there were before the pandemic hit. This adds fuel to the argument that there are a lot of people sitting on the sidelines, either unready or unwilling to return to work.
Why might people be holding off on taking jobs?
Republicans have blamed the federal expansion of unemployment benefits, which makes it less painful (or in some cases, more remunerative) to delay returning to work. As I’ve written before, it is reasonable to believe that, at least for some workers, these benefits could be a factor affecting their decision to seek or reject available jobs. A recent working paper from the Federal Reserve Bank of San Francisco estimated that in “each month in early 2021, about seven out of 28 unemployed individuals receive job offers that they would normally accept, but one of the seven decides to decline the offer due to the availability of the extra $300 per week in [unemployment] payments.”
In other words — the benefits appear to have a small but noticeable effect on job-acceptance trends.
Governors in roughly two dozen states have announced that they will end some or all of the federal jobless supplements in June or July, rather than waiting for them to expire as scheduled in September. So far, this does not seem to have had a huge impact on job-search activity. A recent analysis from Indeed, a jobs platform, found a small bump in clicks on job postings in states that had announced cuts to benefits — but the increase had vanished by eight days after the announcement.
Of course, once the enhanced unemployment benefit programs actually do lapse, job search activity (on Indeed or elsewhere) might pick up. There are lots of other critical factors, however, that are discouraging or preventing people from taking new jobs.
Access to reliable child care remains a significant obstacle. So does the availability of public transit. Workers may continue to worry about risks to their own or their family’s health if they take public-facing jobs, though such fears should fade as more people get vaccinated.
Then there’s the fact that many low-wage service-sector jobs were never exactly pleasant to begin with, and have grown more stressful or even dangerous because of culture wars over mask-wearing and basic safety precautions. Events of the past year have prompted a lot of workers to reevaluate their professional lives and work-life balance more broadly, as my Post colleague Heather Long has written about in depth. People may not want to return to the difficult hours or working conditions they endured pre-pandemic; some are now taking an opportunity (perhaps, yes, enabled by federal cash infusions of various kinds) to reset their careers.
One common response on the left to employer complaints about labor shortages is that firms should just pay more to lure workers back. Many are! Lots of big firms, including McDonald’s, Under Armour and Chipotle, have announced wage hikes and hiring bonuses. Nominal wage growth across the entire private sector also jumped each of the past two months.
There are constraints to how much employers can raise wages, though, especially in the near term.
After a year of forced closures and pitiful demand for their goods or services, many firms are still struggling. They may not have much of a profit margin available to fork over to workers. They could try passing on higher labor costs to customers — some already are doing this — but at some point, customers may balk at how much their local restaurant or retail store has jacked up prices.
Plus, if employers see the various factors holding back labor supply and driving a sudden surge in business as temporary, they may be reluctant to permanently raise wages too much. They might reasonably fear that if and when business slows down again, they’ll be stuck with higher payroll costs that they can’t afford. Historically, employers really, really don’t like cutting wages, because it’s bad for morale and productivity.
The bottom line: Even without more generous unemployment benefits, workers still have lots of reasons they may want or need to delay returning to work, and employers may be limited in how much they can do to lure them back. But as the public health crisis fades, hopefully these other obstacles will, too.