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April Jobs Gain Is Smaller Than Expected

STEVE INSKEEP, HOST:

Just a few hours ago, economists were expecting strong jobs numbers to come out today. Now those numbers are out, and they fall into the category of way below expectations. The numbers for April show the unemployment rate stayed about the same at 6.1%, and the economy created far fewer jobs than the experts thought. NPR chief economics correspondent Scott Horsley is here. Scott, good morning.

SCOTT HORSLEY, BYLINE: Good morning, Steve.

INSKEEP: Scott, they were predicting a million jobs, maybe as many as a million jobs anyway in April, and instead about a quarter of a million. What happened?

HORSLEY: It's hard to know exactly, but the reason the predictions had been so high is the consumer spending data for April was really pointing to a robust recovery. You know, a lot of newly vaccinated customers have been venturing out, spending more freely. That was expected to generate a lot more demand for workers at restaurants and retail shops and in-person entertainment. We do see some of that. Restaurants and bars did add a lot of jobs last month, so did hotels and recreation centers.

But there's also some payback as people started coming out of their pandemic cocoons. Delivery services, which boomed during lockdown, cut lots of jobs. Grocery stores, which thrived when people were eating all their meals at home, also cut jobs in April. And manufacturing lost jobs last month. That's partly a reflection of the trouble that automakers have had sourcing computer chips. So they've idled a lot of workers temporarily, and that weighed on the whole factory sector. Finally, Steve, some employers say they would have added more jobs last month, but they just can't find the workers they need.

INSKEEP: Well, that part is a little surprising because you just told me there's a lot of delivery workers and others who are newly on the job market, and there are millions of people who've been unemployed this whole time.

HORSLEY: Right. But remember, most of the country's not yet fully vaccinated. So a lot of workers are understandably nervous about going to work, especially in a setting where they might be exposed to the virus. You also have people who are busy taking care of sick loved ones, and you have a lot of parents who are looking after children whose schools have yet to reopen.

INSKEEP: Yeah.

HORSLEY: So it's not surprising some employers are having challenges, especially those on the lower end of the pay scale. Tim Quinlan, who's an economist with Wells Fargo in Charlotte, says some employers are going to extraordinary lengths to recruit workers.

TIM QUINLAN: A fast food restaurant in town here as a sign looking for people to staff the window at the drive-through, and they're offering a $500 signing bonus.

HORSLEY: Some employers also complain that the relatively generous unemployment benefits the government's been offering are enabling people to stay out of work longer than they otherwise would, although the researchers say there's little evidence of that. The real sign of a worker shortage would be higher wages. And today's report does say average wages inched up about 20 cents an hour last month. The Labor Department says that could be a sign of growing wage pressure, but it's hard to draw any firm conclusion.

INSKEEP: I love that example that you give of the fast food worker. Somebody in a more upscale kind of tech sector job might be able to work from home while taking care of the kids, doing school remotely or whatever. The fast food worker has to show up. You can't do that remotely. And so maybe they just don't even apply for the job. So people remain out of work at a large scale compared to before the pandemic. When might that change?

HORSLEY: There's still a long way to go. There's 8.2 million fewer workers on payrolls then there were before the coronavirus struck. This week, Montana announced an interesting experiment. They're going to stop paying those extra unemployment benefits, the extra $300 a week at the end of June, two months ahead of schedule. And they're also offering a bonus to workers who do go back to work. So it's sort of a carrot-and-stick approach. We'll see how that works.

INSKEEP: Scott, thanks.

HORSLEY: You're welcome.

INSKEEP: That's NPR's Scott Horsley. Transcript provided by NPR, Copyright NPR.