Payroll employment is expected to rise 700,000 in April after surging 916,000 in March. Private sector payrolls are expected to account for 550,000 of those gains; the public sector is expected to call back 150,000 workers. State and local employment in education was hit hard by the shift from in-person to online schooling; some support staff are finally coming back with the return of kids to classrooms.
Private sector job gains will continue to be led by leisure and hospitality although for year-on-year comparisons, April was a month that saw a lot of hiring in accomodation and food services before the pandemic spread. In previous years, we often saw 300,000 new jobs per month with seasonal adjustment; that could suppress the seasonally-adjusted rise in those kinds of jobs this month.
Retail hiring should pick up, given an increase in mall traffic. Professional services hires should remain strong. We will be watching for a move back into permanent jobs from temporary hires. The shift into temporary hires in professional services was substantial in recent months.
Construction should post strong gains particularly in the housing market, which has faced worker and material shortages. Manufacturing employment is likely to remain stunted by the shortage of computer chips and the consequent need to idle some vehicle plants. The Ever Given, the ship the size of the Eiffel Tower that blocked the Suez Canal, added to delays in the global supply chain during March; that spilled over into April and further delayed deliveries.
Hiring is expected to pick up in health care. Backlogs of routine visits and elective surgeries have built as many stayed away from their doctors and dentists over the last year. We have also seen a surge in retirements. Many older baby boomers opted out of the labor market entirely during the pandemic when risks of contagion were high; it is unclear if they will return.
Average hourly earnings are expected to drop by 0.2% as more low-wage workers return to their jobs. This marks a sharp reversal from the surge in average hourly earnings in April 2020 when low-wage workers were laid off en masse in response to lockdowns. The compositional distortions will make it look as though average hourly earnings contracted by 0.5% from a year ago. The base effects will start to play out in May and as we move in the summer but we need to be careful not to read too much into those comparisons.
Wages at extremely large employers like Amazon, Walmart and Target are rising. These shifts tend to have spillover effects on smaller employers who are competing for workers in local markets. The retail behemoths were able to invest in existing technologies that helped offset the upward pressure the wage hikes would have had on prices.
Separately, the overall unemployment rate is expected to fall to 5.8% with a rise in employment and another slight increase in the number of participants in the labor force. The participation rate is expected to move up 0.1% to 61.6% in April but remain 1.7% below the level in February 2020. A rise in the pace of retirements makes it doubtful that we will return to the precrisis peak any time soon.
There are many reasons participation has been slow to come back. The most important issue has been access to childcare. This is something that has been particularly hard for women of color in low-wage jobs. The most recent federal aid package included childcare but those funds have been slow to materialize.
Fear of contagion and the wait to get vaccines pose additional hurdles for participation. Vaccines have only recently become more available to all who want them; then, it still takes two to six weeks for immunity to kick in. It is important to remember that many laid-off workers live in households also hard hit by COVID cases and fatalities. It is understandable that those workers would be hesitant to return to jobs indoors where the risk of contracting more contagious variants is higher.
Supplements to unemployment insurance (UI) have been blamed for deterring people from accepting jobs, with little to no evidence. Research on a more generous supplement - $600 instead of $300 per week - last year did not show it deterred workers from accepting even lower paying jobs early in the crisis. There are differences. The recent supplements will last longer so they could be a deterrent over the summer.
That said, many of the same workers ran out of funds and were unable to cover the basics of food and shelter for their families last year. Their incentives to avoid a repeat of those problems this year are high. The current supplements expire in early September, while the ranks of those qualifying for extensions to UI benefits are already shrinking.
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