Jobs

The Jobs Picture Is More Complex Than It Seems

Some signs are good, some signs are bad.

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With help wanted and now hiring signs affixed to restaurants seemingly nationwide, small and large businesses alike scrambling to hire, and strong economic signals arriving on consumer confidence and retail sales, expectations for April employment growth revolved around 1 million potential new hires. Those expectations were crushed when the Bureau of Labor Statistics reported just 266,000 jobs created, not even a kissing cousin of 1 million.

Reactions to the weak numbers were most pronounced from Biden administration officials, who, like Adam Smith's "man of systems," see the economy as a chessboard where benevolent leaders move pieces only to learn that "every single piece has a principle of motion of its own, altogether different from that which the legislature might [choose] to impress upon it." Those who think stimulus and regulations reliably generate prosperity best be forewarned. Sometimes we expect 1 million and get 266,000 instead.

The shortfall puts stimulus back in the spotlight. Why didn't the crucial January stimulus work as promised? Should we open the purse wider? What about President Joe Biden's newly unveiled American Jobs Plan, American Families Plan, and the seemingly all-encompassing infrastructure plan? Should we believe they'll work?

Biden, a gifted politician who knows how to make lemonade when handed a lemon, only pushed harder: "Some critics said we didn't need the American Rescue Plan, that this economy would just heal itself. Today's report just underscores, in my view, how vital the actions we are taking are. Our efforts are starting to work, but the climb is steep, and we have a long way to go."

For now, the administration keeps hold of the chessmen.

It should be pointed out that the creation of 266,000 new jobs is not actually that bad. The report provides evidence of a command economy transitioning back to a more market-driven one that is scrambling for footing. The monthly average gain for new jobs over the last seven months, including April, is 355,000, with March's 770,000 the largest. There have not been a million jobs added since August.

With some states relaxing restrictions on gatherings and others still tightening, auto companies shutting down due to unpredictable chip shortages, and even cat food in short supply due to pandemic surges in pet ownership, a COVID-19 command economy that lacks enough market-determined price signals to guide it was always going to be difficult to predict.

While there is little chance the economy will be allowed to completely self-heal, it's trying. Think about the government-shuttered sectors now beginning to reopen. Employment in the hard-hit leisure and hospitality sector saw a 330,000-job increase. With restaurants and bars opening for in-place service, fewer meal delivery people are needed. Employment in couriers and messengers fell by 77,000. And with permanent hires rising, not as many temps were needed. The number employed in that category fell by 111,000, and at 296,000 is lower than in February 2020.

Where we are on the path to pre-pandemic prosperity relates directly to the workforce. As shown in the below chart built using Federal Reserve data, April's count of 161 million workers puts us short by more than 3 million. The workforce is expanding, but with a way to go.

With regulatory switches turning off and on, May's employment number may pop through the roof, but we are still left with a serious question: Are people incentivized to work? Even though Secretary of Labor Marty Walsh argues that the federal unemployment supplement does not contribute to a lower willingness to reenter the workforce, there is abounding anecdotal evidence that the $300 a week addition to state unemployment pay dampens worker enthusiasm.

In response, governors in Arkansas, Montana, and South Carolina have taken steps to cancel their states' participation in the federal supplement program. The U.S. Chamber of Commerce is calling for Congress to close out the federal supplement.

Folks in the real world, like my restaurateur neighbors, offer a common concern: Business is now booming, but their former employees are not interested in returning. The situation is so prevalent nationwide that an April National Federation of Independent Business report indicated that 44 percent of their business-owning members have job openings that cannot be filled—22 percentage points higher than the 48-year average.

When state and federal unemployment benefits are combined, furloughed workers across the states, on average, can earn $15 per hour in unemployment compensation until September without lifting a finger. Indeed, one of my close relatives was furloughed in 2020 and began getting $840 a week in compensation—more than she'd ever earned in her young work life. She was not all that excited when her shop reopened.

As much as unemployment compensation can explain a slowly recovering workforce, there is far more to the incentive issue. Let's return to past-and-future stimulus payments in whatever form. Now revisit the chart and think about the 3 million people no longer in the workforce. Why exactly should we be surprised? If federal programs provide the means to earn a living—or perhaps in some cases to lay aside savings or provide support to loved ones or charity—substituting leisure time for work makes perfect sense.

It's possible to make too much of one jobs report, but April's unexpected weakness provides an opportunity to reconsider the frantic federal efforts to cushion the shock that has hit us, and see if some aspects of the government intervention are working against a return to higher employment and earned income.

Given all of this, the American economy is performing rather well. Yes, $4 trillion in stimulus matters. And yes, more spending, often in the name of creating jobs, will add employment to directly targeted industries and communities. But while one government foot is on the gas, the other is hitting the brakes. Like it or not, we will one day have to pay off the loans that are funding our temporary prosperity. Doing so will require acknowledging that there is still no such thing as unearned prosperity.

NEXT: Biden Can't Explain Why He's Still Wearing a Mask

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  1. >>Biden, a gifted politician who knows how to make lemonade when handed a lemon,

    Salon called. wtf

    1. Biden, who used to be a gifted politician who knew how to regulate and tax lemonade when the lemon crop came in.

      1. What Biden is doing now is more lemon party than lemonade.

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      2. The taxing on the lemonade would be done based on models. And all models point to a bumper crop so better work out taxing the spectrum from growing lemons, the water, sugar, pickers, juicers, glass, labels etc. And then a VAT on the whole thing at the POS.

    2. Methinks Bruce is angling to be selected as someone given a question to ask at Biden’s 2022 annual press conference.

      1. he’d do better hitting on Psaki than on us.

      2. Turns out Bruce is no stranger to the area inside the beltway:
        “…and a former executive director of the Federal Trade Commission.”

        1. Not sure which is the greater ignominy. Reason printing him, or him appearing in Reason.

    3. I read it as grifter politician.

    4. Go to work, get to eat… otherwise wait for the truck to get the sack of potatoes off the back of. Where’s the complex part?

      Am I missing something?

    5. Given Biden’s decades in the Senate and his current occupation of the White House, the statement is objectively correct: he is a very gifted politician. That doesn’t make him a great leader or person; it just means he is good at working the system.

  2. Why is no one, and I mean no one, berating the “experts” for being so drastically WRONG in their estimates?
    The economy did what the economy does; the only disappointment is that the supposed experts can’t find their own ass in a lighted room with mirrors on every wall.

    1. Because there are no more mean tweets. Facts shall not be checked and the emperor is now always clothed.

      1. Pretty much this. You don’t want to be spreading disinformation, now do you?

    2. I’m also bothered by the “stimulus keeping people from returning” narrative. Like the government can only fuck up in one dimension at a time. If I flipped burgers to make ends meet and, all of a sudden, I was out of that job while my neighbor simply shifted to working from home, I’d be reluctant to show back up to flip burgers, stimulus check or not.

      1. I’m thinking children at home because lazy-ass unionized teachers refuse to go back to the classroom is a MUCH bigger culprit here than the 300/wk pandemic payment.

        1. ^This

        2. Same, though they’re both major problems.

          To jump on that, the crazy quarantine rules that get put in place at the Unions’ behest are another stumbling block. It’s pretty tough to plan your work schedule when you need to keep your kid out of school for a week every time he sneezes in the hallway.

        3. But if those payments went away, a lot of those parents would suddenly find a way to make it work.

          1. Damn skippy Zeb.

            Goddamed spot on!

      2. So even if you had no other income and no savings you would still refuse to take that job? Seems unlikely.

  3. yes it seems too difficult

  4. I’m sorry….but is Bruce even moderately libertarian at all?

    Reading his output….tough to tell.

    1. He’s a Reason writer. What do you think?

      1. There is no more Reason, there is Emote!

  5. This is a grand experiment in a universal basic income.

    *shrug*

    1. Or a minimum wage above $15.

      1. And a $100,000 price-tag on 4-wheels that can move a washer and dryer.

  6. “Folks in the real world, like my restaurateur neighbors, offer a common concern: Business is now booming, but their former employees are not interested in returning. The situation is so prevalent nationwide that an April National Federation of Independent Business report indicated that 44 percent of their business-owning members have job openings that cannot be filled—22 percentage points higher than the 48-year average.”

    Probably because half of them were dumped as soon as possible and the rest were probably working in pretty unsafe covid conditions.

    Free market will work surely- either pay them more or suck it up buttercup and go wait tables yourself.

    1. What part of the free market involves the government paying people the equivalent of a full time wage to stay home?

      1. $300 per week equals $7.50 per hour for a 40 hour work week. What part of math don’t you understand?

        1. That’s $300 a week on top of regular unemployment payments. US average UI weekly benefit is $387, plus 300, is 687/wk, which, for a 40 hour work week, equals about $17/hr.

          You can do arithmetic, but you don’t read so good.

          1. There are only 2 million more unemployed now than there were in January 2020. 90%+ of those who collected unemployment during the pandemic have returned to work. It’s feeble to claim people are refusing to work because of unemployment benefits. Even if every one of those 2 million found a job today, there’d still be 5.5 million job openings.

            Amount and Duration of Unemployment Benefits in Arizona

            If you are eligible to receive unemployment, your weekly benefit in Arizona will be 4% of the wages you earned in the highest paid quarter of the base period. The most you can receive per week is currently $240; the least you can receive is $122.

            1. “…90%+ of those who collected unemployment during the pandemic have returned to work…”
              Got a cite for that Ed? you’ve been caught bullshitting, so let’s see it.

              “…It’s feeble to claim people are refusing to work because of unemployment benefits…”
              Bullshit; it’s lame to claim otherwise.

              “…Amount and Duration of Unemployment Benefits in Arizona

              If you are eligible to receive unemployment, your weekly benefit in Arizona will be 4% of the wages you earned in the highest paid quarter of the base period. The most you can receive per week is currently $240; the least you can receive is $122.”
              Pick them cheeries, Ed; it’s what lefty shits do!

            2. And then:
              “…There are only 2 million more unemployed now than there were in January 2020…”
              Which amount to ~4 times the number of people who have died from this “deadly” disease…
              Get that from VOX, lefty asshole?
              Are lefty shits intelligent enough to be embarrassed?

    2. So why haven’t employers simply raised wages to clear the market if it was that easy? Couldn’t possibly be that they simply can’t afford to compete with the benefits could it?

  7. Last week I saw a leftist meme that “Now Hiring” signs that don’t get filled are a Good Thing. Why? Because it means that workers are unwilling to work for less than $15. That’s right, unemployment is a Good Thing to modern leftists!

    Actually, what it means is that workers get more money by not working than they do taking a $15 minimum wage job. The Federal government, and several state governments, are actually paying people NOT TO WORK!

    p.s. All those people whining about immigrants “taking their jerbs”. I wonder where they are? Do they even apply for these jerbs?

    1. How many people are not working because they’re getting rich on unemployment? Considering that only 3.7 million people are currently receiving unemployment (roughly twice the pre-pandemic count), how can those people be responsible for the supposed millions of unfilled jobs?

      1. “…How many people are not working because they’re getting rich on unemployment?..”

        How low an IQ does it require to post such a pile of bullshit and hope adults take it seriously?
        60? Maybe.

  8. How can anyone call senile joe a gifted politician. Maybe, four decades ago? Not based on my recollection. He’s a swamp creature all right though. I’ll give him survival skills for 1600. He’s a great example of failing upward. That may be more because he’s corrupt than skill.

    As for jobs everyone saw this coming, and no federal government program is without intended consequences. This was a stealth UBI from the beginning. They used a crisis to get it in there.

    Result is more inflation, and your retirement and savings crushed. But on the dole you will go now or when you’re 65. Forget leaving anything to your progeny, unless of course you’re one of the billionaires helping manipulate things to steer us over the cliff.

    1. Of course he’s a gifted politician – he’s occupying the highest office. Just like Trump was a gifted politician when he won office – then stopped being one when he lost it.

  9. There are 3.7 million people currently drawing unemployment. That’s a bit more than twice as many as before the pandemic. Let’s say 2 million extra because of the pandemic. There are currently 7.5 million unfilled US jobs. Even if every one of the extra 2 million was hired today, there would still be 5.5 million unfilled job openings.

    Blaming the $300 per week Federal unemployment benefit for that situation is ludicrous.

    1. Dummy

        1. We don’t care about your erotic fantasies.

        2. Well that escalated quickly.

          1. And stupidly, as the equally imbecilic, but gay, Tony is probably one of our newest lefty shit’s allies.

    2. “…Blaming the $300 per week Federal unemployment benefit for that situation is ludicrous.”

      EdG is here to prove how fucking lefty ignoramuses can look at number and still see nothing at all.
      Fuck off and die; make the world a better place and give your dog a place to piss.

  10. A look at the detail of the job openings shows that a large proportion are in the restaurant/hospitality industry. Not only does this sector not pay that much, but there were a lot of complaints a year ago that most businesses were not taking Covid seriously in terms of cleaning and social distancing. If you didn’t trust your former employer and weren’t being paid much, why would you give up the nice unemployment gig to go back to work?
    The other issue is child care/school. Parents caught in this trap are going to wait until child care reopens. Most parents I know do not expect their kid’s schools to reopen until September. Those parents are not going back to work or are going to only do remote work while their kids are home.

    1. What did such parents do back in “normal” times when schools were out for the summer and kids were home? Quit their jobs or make arrangements?

      1. They utilized child care and things like summer camps. Which are also widely not available, or not available in sufficient numbers to accomodate all the people who now need them, or are available but are way too expensive for people who work in retail and restaurant industries. If it were a question of work or starve, they’d find a way, but since they’re basically getting paid not to go to work, why bother?

    2. “…If you didn’t trust your former employer and weren’t being paid much, why would you give up the nice unemployment gig to go back to work?…”
      From a VOX article, right? If you have to invent such back-door bullshit, why would you post it where adults can read it?

      “…Those parents are not going back to work or are going to only do remote work while their kids are home…”
      There may well be some truth to this obvious claim that the teacher’s unions are driving unemployment.
      Dis intermediate all of them and do it now; they have no business screwing the parents at every opportunity.

  11. Take a look at that graph at the top and then look here:
    https://ballotpedia.org/States_that_issued_lockdown_and_stay-at-home_orders_in_response_to_the_coronavirus_(COVID-19)_pandemic,_2020
    “Between March and April 2020, 43 governors issued orders directing residents to stay at home and nonessential businesses to close in response to the coronavirus pandemic. All Democratic governors (24) issued stay-at-home orders in their states, while 19 of the 26 Republican governors issued stay-at-home orders.”
    R’s ain’t headed for sainthood, but D’s are headed the other direction.

    1. And since adding another link means waiting for Godot to ‘moderate’ the post, let’s put this here:
      “87% Of The States That Have Reopened Voted For Trump In 2016”
      https://www.forbes.com/sites/jackbrewster/2020/05/05/87-of-the-states-that-have-reopened-voted-for-trump-in-2016/?sh=181920fd2426
      Yes, correlation =/= causation, but a correlation of that magnitude might suggest some connections.
      If Biden’s handlers want good job numbers, they’d better be on the road to deal with tin-pot dictators like Cuomo and Newsom.

  12. their former employees are not interested in returning. The situation is so prevalent nationwide that an April National Federation of Independent Business report indicated that 44 percent of their business-owning members have job openings that cannot be filled—22 percentage points higher than the 48-year average.”

    Probably because half of them were dumped as soon as possible and the rest were probably working in pretty unsafe covid conditions.

    Free market will work surely- either pay them
    https://wapexclusive.com ,more or suck it up buttercup and go wait tables yourself.

  13. Now I stay at home more

  14. First we may make far too much from a single jobs report, but neither should it be ignored. There may be validity to the fact that some people are too comfortable with unemployment benefits. It also shows that there is little incentive to show up for low wage work. Especially if that work poses risk of infection. We are asking people to return to low wage job where they are exposed to people who may or may not be vaccinated.

    One thing that may help tease out what is happen is the states that are dropping Federal Unemployment assistance. In in the next one or two job reports these states do better, we can conclude the issue is the extra benefits. If they remain the same as control states (no change in Federal benefits) we may have an answer.

    Another thing that may help is as infection rates drops are people more willing to return to low wage jobs where there is greater exposure to people.

    Likely the next one or two job reports will tell.

    1. Really? Some states will drop federal unemployment benefits before others? I hadn’t heard that. Will be interesting if true.

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