WASHINGTON — The recovery of America’s job market hit a pause last month as many businesses — from restaurants and hotels to factories and construction companies — struggled to find enough workers to catch up with a rapidly strengthening economic rebound.
Employers added just 266,000 jobs in April, sharply lower than in March and far fewer than economists had expected. With viral cases declining and states and localities easing restrictions, the recovery from the pandemic recession has been so fast that many businesses have been caught flat-footed in the face of surging consumer demand.
Last month’s hiring slowdown appears to reflect a host of factors. Nearly 3 million people are reluctant to look for work because they fear catching the virus, according to government surveys. More women also dropped out of the workforce last month, likely to care for children, after many had returned in the previous two months.
In addition, construction companies and manufacturers, especially automakers, have been left short of parts because of clogged supply chains and have had to slow production for now. Both sectors pulled back on hiring in April. And some businesses say they believe that a $300-a-week jobless benefit, paid for by the federal government, is discouraging some of the unemployed from taking new jobs.
Still, companies have added jobs for four straight months, the Labor Department said Friday, though the government lowered its estimate of job growth for February and March by a combined 78,000. April’s total is far below March’s gain of 770,000.
The resumption of hiring has encouraged some Americans to start looking for jobs, which means they are newly counted as unemployed if they don’t immediately find work. This is what happened in April, when the unemployment rate ticked up from 6% to 6.1%.
Employers are now posting far more jobs than they did before the pandemic, and “help wanted” signs dot many restaurant windows. Other telltale signs of labor shortages have emerged as well: Average hourly pay rose 0.7% in April to $30.17, which the government said suggests that the fast reopening of the economy “may have put upward pressure on wages.” The average workweek also rose, evidence that companies are asking their employees to work more.
“Demand is outpacing supply,” said Daniel Zhao, senior economist at Glassdoor, a job listings website. “That’s something that is occurring across the economy, in semiconductors to lumber, and we’re seeing a similar crunch in the labor market.”
Steven Tamasi, CEO of Boston Centerless, which manufactures parts for medical device makers and aerospace companies, said his clients had estimated in January that it would take nine months to regain pre-pandemic sales levels.
“Well, it only took three months,” he said. “It happened so fast, people were caught off guard.”
Tamasi wants to add 10 workers to his staff of about 114, which would give him a larger workforce than he had before the viral outbreak. He is quickly dusting off old contacts at state labor agencies and community colleges. But some candidates disappear after an interview or even after accepting a job. To attract more applicants, he is considering raising entry-level pay and accelerating pay raises for new workers.
The drop in hiring suggests that the Federal Reserve is still months away from slowing its purchases of Treasurys and other bonds, which are intended to keep long-term interest rates low. Chair Jerome Powell has said that it would take “a string” of reports like the one for March to show that the economy was on track for a full recovery. Fed officials have signaled that they don’t intend to raise their short-term benchmark rate until after 2023.
At a news conference, Treasury Secretary Janet Yellen cautioned that a swift recovery from an event as catastrophic as a pandemic isn’t likely to be free of disruptions. She cited shortages of lumber, computer chips and other goods.
Some economists note, too, that the $300-a-week federal jobless benefit, available until September, has come on top of state payments that average about $320. The combined unemployment benefits mean that anyone earning less than $32,000 a year can potentially receive more income from unemployment aid than from their previous jobs, according to economists at Bank of America.
Marie M., who asked that her full name not be used so her comments wouldn’t affect her job prospects, said she had been juggling shifts at two restaurants in Los Angeles in the fall of 2019. Once the pandemic hit, she lost both jobs.
Last year, she collected around $30,000 in unemployment aid — about the same amount she had earned working in 2019. In July, she plans to start looking for restaurant work again. This time, she feels more confident that she’ll get the hours she needs. Restaurants are already reaching out to her about jobs, so she can afford to be more selective.
“Unemployment benefits have been like collective bargaining,” she said. “They made a union out of all of us.”