By Eric Morath
In a red-hot economy coming out of a pandemic and lockdowns,
with unemployment still far higher than it was pre-Covid, the U.S.
economy finds itself in a striking predicament. Businesses can't
find enough people to hire.
Rising vaccination rates, easing lockdowns and enormous amounts
of federal stimulus aid are boosting consumer spending on goods and
services. Yet employers in sectors like manufacturing, restaurants
and construction are struggling to find workers. There are more job
openings in the U.S. this spring than before the pandemic hit in
March 2020, and fewer people in the labor force, according to the
Labor Department and private recruiting sites.
Surveys suggest why some can't or won't go back to work.
Millions of adults say they aren't working for fear of getting or
spreading Covid-19. Businesses are reopening ahead of schools,
leaving some parents without child care. Many people are receiving
more in unemployment benefits than they would earn in the available
jobs. Some who are out of work don't have the skills needed for
jobs that are available or are unwilling to switch to a new
Hiring has been robust recently, despite the labor shortfall.
U.S. employers added 916,000 jobs in March, according to the Labor
Department, and economists project that the April jobs report, due
out Friday, will show employers added 1 million more.
Still, the shortage threatens to restrain what is otherwise
shaping up to be a robust post-pandemic economic recovery. Some
businesses are forgoing work, such as not bidding on a project,
delivering parts more slowly or keeping a section of the restaurant
closed. That reduces the pace of the economy's expansion. Other
companies are raising wages to attract employees, which could
inflate prices for customers or reduce profit margins for
Workers could stand to benefit from a temporary reduced supply
of labor. They could command promotions and better wages, which
they then could spend in their communities, boosting economic
output. They might also be able to negotiate more flexible
schedules or other perks.
Analysts say the labor shortages should ease over time as more
potential workers are vaccinated, schools fully reopen and federal
benefits expire, though the process could take months and the
impacts are already being felt.
"It's a little shocking we're at this point already," said Steve
Lucas, chief executive of iCIMS Inc., a cloud-based recruiting
platform with 4,000 large firms such as Target Corp., CVS Health
Corp. and Ford Motor Co. as customers. "Businesses are champing at
the bit to grow and are moving faster than applicants are willing
March job openings rose 34% compared with January 2020, before
the pandemic took hold in the U.S., iCIMS said. Meanwhile, the
number of job applications was down 13% in March from the
A Federal Reserve report in April described shortages across
numerous occupations, including drivers and housekeepers. An April
survey by job search site ZipRecruiter found fewer job seekers felt
financial pressure to take the first job offer they received -- 35%
compared with 51% when the same question was asked in 2018. More
than half the people surveyed said they preferred a job where they
can work from home, and 45% said they would want that option after
the pandemic abates.
"The pandemic has changed people's motivations," said
ZipRecruiter economist Julia Pollak. "Employers may need to be
patient, as vaccines are still being rolled out, and may have to
become more flexible in order to find workers."
The country had 8.4 million fewer jobs in March 2021 than before
the pandemic began, but not all those who lost jobs are seeking new
ones. By March, nearly 4 million fewer people were in the labor
force -- Americans who hold jobs or are seeking work. That means
millions who were displaced during the pandemic remain on the
sidelines of the job market.
Hiring appears to be accelerating this spring, but the share of
adults in the labor force has held nearly steady since last
Recent pay trends aren't much different than before the
pandemic, one sign that the job market is tighter than that
lingering job shortfall would suggest.
Wages and salaries for private-sector workers rose 3% in the
first quarter from a year earlier, matching the growth rate at the
end of 2019, when unemployment was near a 50-year low, according to
the Labor Department's Employment Cost Index, which adjusts for
employment shifts among occupations and industries.
Walmart Inc., the largest private-sector employer, announced
raises for 425,000 employees in February, lifting its average wage
above $15 an hour. The second-largest private employer in the U.S.,
Amazon.com Inc., said in April that more than 500,000 of its
employees would see pay increases of between 50 cents and $3 an
hour. Costco Wholesale Corp. lifted its starting wage to $16 an
hour earlier this year.
Chicken company Pilgrim's Pride expects to pay out more than $40
million this year to retain workers and compete for new ones, Chief
Executive Fabio Sandri said on the company's quarterly earnings
call last week.
Moving company Two Men and a Truck, based in Lansing, Mich.,
said it's seeing some upward wage pressure. The company wants to
hire 2,000 workers to meet demand for its peak summer moving
season, a reflection of the strong housing market. Sales of
existing homes were up 12% from a year earlier in March, according
to the National Association of Realtors, in what has been the
hottest housing market in 15 years.
Daniel Funkhouser, operations manager at the company's
Jeffersonville, Ind., branch is eager for more help. With a single
co-worker, Mr. Funkhouser said he has worked up to 75 hours in a
week and has moved as many as four families a day. Sometimes the
company sends him extra help from Bloomington, a two-hour drive
Mr. Funkhouser has advanced quickly since getting hired for an
entry-level moving position a year ago. He first trained to be a
driver, then became a trainer himself. Now he manages a company
branch. He said it has been difficult to find workers who have the
physical ability to move heavy items and the customer-service
skills to work with clients during moves, which are often a
"It's not for everyone," he said. "Some people find out the job
is harder than they expect, and they just flee."
Pay for movers typically starts at around $15 an hour and
drivers at $17 an hour, said Sara Bennett, the company's chief
talent officer. Drivers are hard to recruit because most states
have additional licensing requirements and the company is competing
with Amazon and UPS for people with those qualifications. The
company recently started offering perks, such as restaurant gift
cards, to vendors and customers who send workers to the company,
Domino's Pizza Chief Executive Richard Allison said last week
that the labor market right now in the U.S. is creating the most
difficult staffing environment the company has seen in a long
"The real pinch point in the business is drivers," he said on
the company's earnings conference call.
Fueling the labor-market imbalance is the fact that many
workers, particularly women, find it difficult to work outside the
home. Only 60% of the 200 largest U.S. school districts were fully
reopen the week of April 27, according to Georgetown University's
FutureEd think tank, and many child-care centers continue to
operate at reduced capacity.
Some employers and economists cite enhanced unemployment
benefits as another factor. More than 16.1 million people received
unemployment benefits the week ended April 17, the Labor Department
said Thursday. That includes gig workers and the self-employed who
are typically not eligible for such payments.
Under relief bills passed by Congress, those receiving jobless
benefits get an additional $300 a week on top of regular state
benefits, which average $318 a week, according to the Labor
Department. That means the average unemployment recipient earns
better than the equivalent of working full time at $15 an hour.
Those enhanced benefits are available until September, for a
maximum of nearly 18 months -- about three times longer than most
states typically allow.
Lorne Zaman lost his jobs as a concert promoter in Los Angeles
more than a year ago. He hasn't worked since, supporting himself on
savings, stimulus checks and unemployment benefits, which have been
about $750 a week in recent months. The benefits cover his rent and
other bills, he said, but don't leave any extra money at the end of
Mr. Zaman, 45, said he's had no interest in taking available
jobs at warehouses or restaurants, but he's eager to return to the
entertainment industry. His former employer told him the company is
likely to start recalling workers within the next few months.
"I really enjoyed what I did," he said. "If the government is
going to pay you to stay home, you're going to do that unless that
job you really want comes along."
A University of Chicago study found 42% of those on benefits
receive more than they did are their prior jobs, and the share is
higher when factoring in temporary health insurance offered through
Adam Ozimek, chief economist at freelance platform Upwork, said
he thought improved unemployment benefits were a wise policy
earlier in the pandemic, but now sees problems. He said some of the
hardest hit parts of the economy have been the slowest to bounce
back, including restaurants, hotels and in-person service providers
that face a shortage of workers and rising wage pressures.
"The benefits are a policy mistake that is going to hold back
the recovery in the coming months," he said. Dr. Ozimek, who
described himself as a neoliberal economist, a philosophy that
favors free markets and deregulation, said businesses that need to
pay more to attract workers this summer will find it difficult to
lower wages in the fall, when he said the labor market could
loosen, once unemployment benefits expire.
Other economists, including Heidi Shierholz, senior economist at
the Economic Policy Institute, a left-leaning think tank, say
unemployment benefits' disincentive effect is overstated. She said
if there was a significant shortage of labor, employers wouldn't be
able to hire more than 900,000 workers in a month, as they did in
March, and wages would be escalating at a much more rapid rate.
Dr. Shierholz, who worked in the Obama administration, said the
pandemic caused a huge disruption in the labor market and it will
take time for the dust to settle.
"And if the extended benefits mean some workers can take the
time to find a job that's a better match for their skills, and pays
them a better wage, that's a good thing, not a bad thing," she
For job seekers, the sectors with the most rapidly rising job
openings in the past year, such as construction, manufacturing and
logistics, often require physical abilities, such as lifting heavy
objects, and have special requirements, such as a commercial
The shift to remote work also means more jobs are being created
at outlying warehouses and suburban restaurants rather than
downtowns, airports and shopping malls that tend to have better
access to public transportation.
"If you lost a near-minimum-wage job with a 15-minute commute,
it may not be worth taking a near-minimum-wage job with a 60-minute
commute, especially if schools are closed and you don't have child
care," said University of Chicago economist Steven Davis.
Bob Bellin, who had worked previously in sales, would go back to
work if the right sales job emerged. He said he was close to
accepting a job in Austin, Texas, where he'd recently moved, in
March 2020, but the opportunity fell through. In the year since,
Mr. Bellin, 66, said he hasn't aggressively pursued other work,
supporting himself on savings.
"I haven't looked that hard, given my age and the job market,"
he said. "My plan is to wait for the unemployment numbers to get
down to where they were and then I'll start looking."
--Jacob Bunge and Micah Maidenberg contributed to this
Write to Eric Morath at firstname.lastname@example.org
(END) Dow Jones Newswires
May 06, 2021 11:20 ET (15:20 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.