Critics question whether unemployment benefits stop some from returning to work

CHICAGO (NewsNation Now) — U.S. employers hired far fewer workers than expected in April, likely frustrated by labor shortages, leaving them scrambling to meet booming demand as the economy reopens amid rapidly improving public health and massive financial help from the government.

America’s employers added just 266,000 jobs last month, sharply lower than in March and a sign that some businesses are struggling to find enough workers as the economic recovery strengthens.

With COVID-19 cases declining and states and localities easing restrictions, businesses have added jobs for four straight months, the Labor Department reported Friday. Still, the unemployment rate ticked up to 6.1% from 6% in March.

Economists polled by Reuters had forecast payrolls advancing by 978,000 jobs.

The jobs report, the first since the White House’s $1.9 trillion COVID-19 pandemic rescue package was approved in March, will probably do little to change expectations that the economy entered the second quarter with strong momentum and was on track for its best performance this year in almost four decades.

President Joe Biden addressed the disappointing jobs report in remarks Friday, saying “we knew this wouldn’t be a sprint, it would be a marathon.”

Biden defended his sweeping COVID-19 pandemic rescue package and said that this was just the first step in a big economic recovery.

“Some critics said we didn’t need the American Rescue Plan — that this economy would just heal itself,” Biden said. “Today’s report just underscores, in my view, how vital the actions we’re taking are…we’re still digging out of an economic collapse.”

From manufacturing to restaurants, employers are scrambling for workers. A range of factors, including parents still at home caring for children, coronavirus-related retirements and generous unemployment checks, are blamed for the labor shortages. The moderate pace of hiring could last at least until September when the enhanced unemployment benefits run out.

The jobless rate has been understated by people misclassifying themselves as being “employed but absent from work.” Millions of Americans remain out of work and many have permanently lost jobs because of the pandemic. 

Biden plans to spend another $4 trillion on education and childcare, middle- and low-income families, infrastructure and jobs. The Federal Reserve has signaled it intends to leave its benchmark interest rate near zero and continue to pump money into the economy.

Most economists expect job growth to strengthen as more vaccinations are administered and trillions in government aid spreads through the economy. Even if another uptick in COVID-19 cases were to occur, analysts don’t expect most states and cities to reimpose tough business restrictions. Oxford Economics, a consulting firm, predicts that a total of 8 million jobs will be added this year, reducing the unemployment rate to a low 4.3% by year’s end.