(1) Unemployment benefits are too generous
Since the pandemic hit in 2020, Republicans and businesspeople have criticized expanded unemployment insurance — inserted into March 2020’s CARES Act by Democrats in the House — as too generous. Although the $600 federal unemployment addition to weekly benefits expired last year, it was soon reinstated at $300 per week, which President Joe Biden’s $1.9 trillion stimulus extended through September 6.
This jobs report is being seized upon as evidence that the benefits are still too generous. The US Chamber of Commerce has already called for their cancelation in the wake of the April jobs numbers.
Toby Malara, government affairs counsel at the American Staffing Association, told Insider in February that while unemployment has been “paramount” in helping people during the pandemic, it’s important to find a balance that doesn’t disincentivize people from returning to work.
Mercatus economist Michael D. Farren said in a statement that April’s jobs report might actually be better than it looks on the surface, and that while “changes to unemployment insurance probably are reducing labor supply, but workers’ primary inhibition to seeking employment is likely still COVID-19. But if the employment statistics next month look similar to April, Congress may need to take unemployment insurance back to the drawing board.”
Two states, South Carolina and Montana, have already moved to end additional pandemic unemployment benefits. Montana is opting instead to give workers a $1,200 back to work bonus, according to CNN.
But liberal economists — and the president — disagree with that assessment of UI. When asked at a Friday press briefing if enhanced UI bonus benefits were slowing down the return to work, President Joe Biden said: “No, nothing measurable.”
Later on Friday, Sen. Bernie Sanders wrote on Twitter that “We don’t need to end $300 a week in emergency unemployment benefits that workers desperately need. We need to end starvation wages in America. If $300 a week is preventing employers from hiring low-wage workers there’s a simple solution: Raise your wages. Pay decent benefits.”
(2) Women are being employed at lower rates
Overall, 165,000 women ages 20 and over left the labor force in April. Unemployment rates for Black and Latina women also remain elevated.
“If you added all of the women who’ve dropped out of the labor force since February 2020, the unemployment rate for women would be 8.1%, instead of 5.6%,” Jasmine Tucker, the director of research at the National Women’s Law Center, told Insider on Friday.
According to a Friday press release from the NWLC, it would take women 28 months to reach pre-pandemic — and that doesn’t account for potential population growth and more women graduating into the labor market.
Tucker said the April report underscores the need for more affordable and accessible childcare, as unemployed parents — especially mothers — contend with mixed reopenings and wanting to keep themselves and their families safe.
“While we’re reopening very expensive childcare centers, there’s going to be a mismatch there of who’s going to be able to afford to go back to work,” Tucker said.
(3) There are too many temporary layoffs
Counterintuitively, layoffs were unexpectedly high in the report, signaling companies are still struggling despite widespread evidence and expectations of an economic boom in 2021.
Approximately 2.1 million people said their pandemic unemployment was temporary in April.
That number is up from 2 million in March, both much higher than the 700,000 pre-crisis low and much lower than the pandemic-era peak of 18 million.
These temporary layoffs could make it harder for people to return to work, especially those with health concerns, that worry about getting sick should they choose to work again. This, accompanied by workers holding out for higher wages amidst large companies raising their minimum wages, could contribute to the poor jobs report.
(4) Seasonal adjustments could be off
Finally, a wonky explanation could account for some of the drop in job-gains data.
Seasonal adjustments measure and remove influences of seasonal patterns, like weather and holidays, to reveal how employment and unemployment change from month to month. Chris Rugaber, economy reporter for the Associated Press, flagged on Twitter that economists have noted potential seasonal adjustment issues: Non-seasonally adjusted jobs rose by about 1.1 million, showing that seasonally adjusting the data could be obscuring the true number of gains.