Payroll employment rose 266,000 in April and was revised down to 770,000 in March. We are still 8.2 million jobs in the hole from the peak we hit during the last expansion in February 2020. Private payrolls accounted for 218,000 of those gains; the remaining 48,000 were government hires, mostly in public schools at the local level. Schools continued to reopen on a hybrid basis, part online and part in-school, during the month.
Leisure and hospitality employment surged with 331,000 new jobs more than accounting for all of the gains in the private sector. Those gains were concentrated in restaurants, bars, amusement parks and gambling establishments. Jobs in accommodation increased, but less than expected. Many resorts have been reluctant to staff up ahead of summer despite strong demand. Too many vacation plans were cancelled a year ago, which forced them to scale back following lockdowns. They want to avoid a repeat of that this summer. Stadiums also reopened.
Funds for day care, included in the most recent stimulus package, started to show up. Hiring at childcare centers increased by 11,500 after rising modestly in March.
Construction employment flatlined, with losses in nonresidential offsetting a gain in residential. The losses in nonresidential were concentrated in specialty contractors, who were brought on earlier in the year to reconfigure offices.
Losses were broad-based in everything from manufacturing, which is suffering from supply chain bottlenecks, to professional services. Vehicle manufacturing dropped by 27,000, which more than accounted for the total drop in manufacturing. A shortage of computer chips from Taiwan idled many plants. The loss in professional services was concentrated in temporary hires, which fell by 111,400.
Health care hiring also declined. Burnout and retirements are rising, while physicians’ and dentists’ offices are hiring to catch up on the backlog of routine exams since the pandemic began. Many patients were forced to delay or cancel their appointments when contagion surged.
Several factors accounted for the weakness we saw in the April jobs number. Resorts and retailers are reluctant to staff up ahead of reservations, given the repeated cancellations in the last year. What was once considered a sprint is now viewed as a marathon, with employers and workers both skittish on declaring victory before we cross the finish line of herd immunity.
Average hourly earnings surprised to the upside by rising 0.7% compared to the previous month, but only 0.3% from a year ago; average wages surged when low-wage workers were laid off en masse in April of 2020. Hours worked edged slightly higher to 35 hours a week, matching the record-high in January. (The data only goes back to 2006.) This is consistent with anecdotes that employers are doing more with fewer workers.
Separately, the unemployment rate rose to 6.1% in April on an uptick in the labor force participation rate. Those gains were driven by a rise in participation by men and Black women, who are finally returning to the labor market now that schools are reopening. The overall participation rate for women was flat for the month.
The employment to population ratio was 57.9%, up slightly in March, but still down dramatically from the 61.1% we saw in February of 2020. The labor force is now down by 3.5 million people since February 2020, with women still accounting for the majority of those losses. The unemployment rate is closer to 8.1% if we add in those workers who disappeared from the labor force over the last year back into the mix. Retirements have accelerated over the last year; it is unclear how many will return to the labor force. Fear of contagion played a role in those retirements.
The ranks of the long-term unemployed (more than 27 weeks) held steady at 4.2 million or 43% of the total unemployment. That share is the same as last month, which was the highest since 2012 when the economy was still struggling to recover from the Great Recession.
The economy has proven easier to put into a pandemic-induced coma than to awaken. Employers and employees remain skittish after a year of false starts. We need to see a move closer to herd immunity for everyone to feel reassured that when we reopen, we will stay open. A sharp drop in unemployment claims near the end of April suggests that May and June will be much stronger months for employment.
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