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With 8 million Americans out of work, why are more companies not filling jobs?

Economic IndicatorsMay 07, 2021 09:06PM ET
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2/2 © Reuters. FILE PHOTO: Matt Dillion and Chad Damron weld an upper deck assembly at Look Trailers cargo trailer manufacturing facility in Middlebury, Indiana, U.S., April 1, 2021. REUTERS/Eileen T. Meslar 2/2

(Corrects name in paragraphs 25, 26 and 27, to Drew Hall, not Richard Bunce)

By Ann Saphir and Lucia Mutikani

SAN FRANCISCO/WASHINGTON (Reuters) - As the economy revs up to meet the rapacious demand of tens of millions of newly vaccinated Americans, employers say they cannot fill their yawning need for labor.

Take Alex Washut. In January he mapped out hiring plans for his two breakfast and lunch eateries in western Massachusetts and figured he'd need to hire 20 new cooks, servers, dishwashers and other staff by May. He has doubled wages in some cases but has managed to hire only five; most of the time, he said, job candidates never even show for their interviews.

At the same time, the U.S. economy is down more than 8 million jobs since before the pandemic, and Federal Reserve officials say the true unemployment rate is closer to 10% than the 5.8% a government report is expected to show on Friday.

Analysts estimate U.S. employers added nearly a million new jobs last month, but the question is not why U.S. employers hired so many, but why they did not hire more?

What gives? It's a long list, but here are some of the highlights:

* Parents - particularly mothers - cannot work because closures or shortened hours at schools and daycare keep them home to watch their kids.

* Would-be workers remain concerned about health risks amid a pandemic still claiming about 700 American lives daily.

* Stock market gains have given some older workers the cushion to retire.

* Some younger workers are finding jobs in new fields, shrinking the labor pool for the industries they left behind.

* Many employers need to fill jobs requiring skills that sidelined workers may not have.

* Employers complain that enhanced unemployment benefits and other government aid are keeping workers on the sidelines, content to collect a check rather than work for a living. Data released by the Labor Department on Thursday showed more than 16 million people are still receiving some form of unemployment benefit, now more than a year into the pandemic.

"We recognize that the labor supply has been affected by the pandemic... (but) are seeing little evidence though that enhanced unemployment benefits are currently affecting Americans' willingness to work," Whitehouse spokeswoman Karine Jean-Pierre said on Thursday.

What's that all add up to? In a nutshell, this: A National Federation of Independent Business survey showed a record 42% of small businesses had job openings they could not fill in March.

Economists say that if employers need workers so badly, they would raise pay. So far, that's not happening. U.S. compensation rose more quickly than expected in the first quarter, but the boost came mostly from one-time bonuses to financial sector workers, and was not broadly shared.

"The full sentence is 'I can't find workers at the wage I am willing to offer.' Full stop," said ADP chief economist Nela Richardson. "You can find workers."

Graphic: The jobs hole facing Biden - https://graphics.reuters.com/USA-ECONOMY/JOBS/xlbpgygrnpq/chart.png

EYES ON SEPTEMBER

Over the next several months analysts will watch intently to see how the labor market adapts to the biggest changes since after World War Two, when millions of soldiers returned home and wartime assembly lines shut down. It may be the end of summer before there is any real clarity.

"Ultimately as we get into September and we see schools reopening and some decline in unemployment insurance benefits we do expect for a lot of these labor scarcity issues to be alleviated," Deutsche Bank (DE:DBKGn) economist Matthew Luzzetti said.

Or, as Cleveland Fed President Loretta Mester put it on Wednesday, as vaccinations rise and more schools return to in-person learning, "We'll get to that better equilibrium in the labor market between supply and demand."

It is not unusual for it to take time for labor markets upended by a recession to work out kinks.

After the last downturn, Fed surveys showed employers grousing about worker shortages in 2012, when the unemployment rate was above 8%. When compensation began to rise in earnest several years later, workers flooded back to the labor market.

"What we saw was that labor supply generally showed up," Fed Chair Jerome Powell said last month. "In other words, if you were worried about running out of workers, it seemed like we never did."

This time, with the economy projected to grow at its fastest pace since 1984, the rebalancing may be quicker. The Fed will be watching what happens with wages, and prices.

Graphic: Jobs and job openings - https://graphics.reuters.com/USA-ECONOMY/JOBS/azgvogmkmvd/chart.png

BACK TO THE KITCHEN? NOPE

Some workers in industries hard hit by job losses, such as restaurants and retail, have moved sectors entirely, said Bill Spriggs, chief economist with the AFL-CIO and a professor at Howard University.

Some people who had low-paying jobs before the pandemic were struggling to cover their bills even before the crisis and may be searching for more financial security, he said.

Drew Hall, 33, was working as an executive chef in South Philadelphia when the pandemic hit. His eatery shut for six weeks, reopened for takeout, and then shut again.

Laid off, Hall said he "decided I needed to do something different." He went to coding school, graduated in December and had a job offer two weeks later. He has since had a couple of offers to get back into the restaurant business. "I don't plan on doing that," he said.

Hall's gain is the restaurant industry's loss. Washington-based restaurant operator Knead Hospitality is so desperate for workers it is offering hiring bonuses of up to $1,000 for servers, line cooks and bartenders.

Washut, the Massachusetts restaurateur, said he figures that to entice people collecting unemployment benefits he would have to set starting hourly pay at $19, up from $15 now. That would mean bumping wages even higher for existing staff or risk them feeling short-changed. To pay for all those raises, he would have to jack up prices on his $12 plates of Caribbean jerk chicken hash and eggs. "And who will pay $20 for an order of hash?"

Jimmy Nigg, who runs the Monkey Barrel Bar in Denver, is in a similar boat. He often finds himself in the kitchen making $5.95 cheeseburgers or behind the bar serving $6 craft beer because he can't find staff, though he now offers line cooks nearly $19 an hour.

Still, he's betting the upward wage pressure is temporary.

By September, he said, people will be willing to take "$15 or $16 because they are so desperate."

Graphic: Jobs in real time - https://graphics.reuters.com/USA-ECONOMY/REOPENING/azgvoaggdvd/chart.png

With 8 million Americans out of work, why are more companies not filling jobs?
 

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Comments (26)
glenn green
glenn green May 09, 2021 10:01PM ET
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Given there is so much information from different sources i do wonder how do u control insider trading I talking to my peers in  Australia ASIC,  banks  are  now  employing heavily in fraud accounting and trying to get customers to pass finance trading course before they can use platforms. financial management/markets, crypto currencies  is being taught to kids at primary school very early to be aware of risks so by 18 they are very astute in finance and managing money
glenn green
glenn green May 09, 2021 9:54PM ET
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i also think online investment scams has causded huge wealth reduction for any middle class and this may impede recovery as demand for goods services drop as got no cash. many middle class lost job then tried to make money then got caught up in scams well thats whats happened in australia. I also think there people very confused on cyrpto and paper financial system and are they competing. I think social media also has caused great fomo impact  which sees these small investors wiped out once institution and whales make there move on any given asset they hold
glenn green
glenn green May 09, 2021 9:49PM ET
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Australia has same issue i think business still very nervous  given many countries fighting and war looming doesn't help I am worried once government support reduces then we may fall off a cliff I like to see what growth rates GDP is net off government support and compare this to historical I also think economic decision making has permanently changed as Covid has been very long hence people have adapted to new world and are far more wiser and understand volatility in markets and economies. Its annoying to see countries fighting whilst other countries like India brazil are suffering i wish world  would come together get on top of covid so there is more stability
Ji Go
Ji Go May 08, 2021 6:01PM ET
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Definitely merits to both sides of the argument. People should be paid a living wage. At the same time SMB owners bearing the costs and the risks of entrepreneurship shouldn’t have to go insolvent due to labor costs in already challenging market dynamics.The key takeaway that everyone is missing however: this growing conflict between employer/employee is going to pave the way for automation and machines.
Marcus Giordany
Marcus Giordany May 08, 2021 10:02AM ET
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biden worsest president ever
Mark Stallone
Mark Stallone May 08, 2021 10:02AM ET
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So far, absolutely. wait til his tax increases kick in.. 2022 & 23 are going to be dark years.
Adam Paine
Adam Paine May 08, 2021 10:02AM ET
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that's not even a word
Adam Paine
Adam Paine May 08, 2021 10:02AM ET
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ok, yes it is but still. not worsest
Andrew Groves
Andrew Groves May 08, 2021 9:54AM ET
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These jobs can also motivate people by increasing wages!! If you can make more sitting at home maybe the problem is also the poor wages these employers are offering these people.
Steve Lora
Steve Lora May 08, 2021 2:08AM ET
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Biden said 1 million jobs. Where are they Joseph
JR Pierce
JR Pierce May 08, 2021 1:41AM ET
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you can see the lefty in this writer. It's real simple, the democrats destroyed the economy on purpose, and want to keep the feeble minded on the FED teat.
Dave Jones
Dave Jones May 08, 2021 12:04AM ET
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so basically the only jobs are minimum wage skivvies. oh America how far thou have fallen
TL Chan
TL Chan May 08, 2021 12:02AM ET
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Follow Musk, you can buy fraction of btc, or Ether, or Doge, no need to work.
TL Chan
TL Chan May 08, 2021 12:00AM ET
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Musk telling everyone no need to work
TL Chan
TL Chan May 07, 2021 11:59PM ET
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Yes, follow Musk, eat on Doge! Doge is better than Hotdog.
David David
David9 May 07, 2021 11:05PM ET
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Because many do not need to work anymore... we only need to buy DOGE.
Bill Cool
Bill Cool May 07, 2021 10:27PM ET
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That’s the problem with our system. The owners want their workers “desperate”. Despicable. If you need desperate workers to run a business, you shouldn’t be running a business.
Notvery Goodathis
Peteymcletey May 07, 2021 10:09PM ET
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Enhanced unemployment is 100% the cause. if it never happened, we'd have zero job openings. but that would have kept biden from winning.
Notvery Goodathis
Peteymcletey May 07, 2021 10:07PM ET
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Democrats ruined the economy possibly forever. Stop paying people to sit at home and do nothing. Stop rewarding people for producing kids.
Morne de Wet
Morne de Wet May 07, 2021 9:55PM ET
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Who will work if you get stimulus money for free.The money is way more to sit at home and do nothing
Mike Chen
Mike Chen May 07, 2021 2:59AM ET
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In summary, Americans are following Japanese lifestyle. Stay at home. Spend less. Invest in stocks. Earn from parents and govt paycheck. Govt owns half of the economy and assets like Japan.
Javier Escamilla
Javier Escamilla May 07, 2021 1:08AM ET
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Simple as running a business, when employers cant afford your services you let them go for a better paying job (just as they do to employees when cutting hours, bonuses etc to benefit shareholders and CEOs compensation)
Michael Angelo
Michael Angelo May 07, 2021 12:23AM ET
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Check how long it takes to get unemployment and will see that is not the issue people (lazy?) are not coming. People don't want to go back to be "servants " for a few dollars that are been kicking out when the situation gets ugly. Labor force has change, right now lets face reality.
leehiung chong
leehiung chong May 07, 2021 12:23AM ET
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certain sector business is stuck in exploiting desperate cheap worker to stay profitable ...why can't see many workers left to do better things
leehiung chong
leehiung chong May 07, 2021 12:23AM ET
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certain sector business is stuck in exploiting desperate cheap worker to stay profitable ...see workers left to do better things
Roger Miller
Roger Miller May 06, 2021 11:02PM ET
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Exactly what evidence is the White House looking at that shows enhanced unemployment benefits are not the problem? Studies by their left wing economic shills?
Edward Sims
Edward Sims May 06, 2021 10:30PM ET
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In other words, exactly what the right warned about. The government has incentivized unemployment so much that people would rather sit around at home on welfare than return to work. Meanwhile cost of living is skyrocketing, with the rate of increase in blue states such as California rising at rates up to 85% higher than the rest of the country. This is why in capitalistic societies people complain about there being too many rich people, and in socialistic/communistic societies people complain about there being too many poor people.
Al Gore
Al Gore May 06, 2021 10:16PM ET
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socialism for rich
Javier Escamilla
Javier Escamilla May 06, 2021 10:10PM ET
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Well maybe someday companies would care more for employees rather than shareholders.. whom am i kidding lol..
Roger Miller
Roger Miller May 06, 2021 10:10PM ET
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Read the second paragraph, the guy owns two eateries and has doubled some wages. Obviously a small business that is being harmed by government programs.
Javier Escamilla
Javier Escamilla May 06, 2021 10:10PM ET
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Roger Miller wouldnt be surprise if that same business that needs staff right now let go of emoloyees during the pandemic while at the same time collecting free money from ppp loans.. karma is a b7&)$.
Rick Baier
Rick Baier May 06, 2021 10:05PM ET
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Benjamin the handout Democrats and their housing projects and Detroit/Atlanta/Philly/believe will fit Webster's dictionary of Lazy. 60 years of handout welfare hard to untrain that.
 
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