Jobs surprise triggers battle over federal aid

The steady jobs recovery from Covid-19 slowed dramatically in April, stunning Wall Street analysts and raising questions about the strength of the pandemic comeback and the impact of generous unemployment benefits.

The government said Friday that the economy created 266,000 jobs in April — a strong number in ordinary times but sharply below the Wall Street consensus of nearly 1 million, driven by reopenings in the beaten-down leisure and hospitality sectors as vaccinations continue.

The figure for March was also revised down by 146,000 to 770,000. The soft April number embarrassed prognosticators and provided fuel for partisans and economists across the ideological spectrum to declare that their policy ideas were vindicated.

For conservatives, the report suggested that generous pandemic-era jobless benefits are discouraging workers from taking available positions. Several states including South Carolina and Montana are already trimming back benefits packages. Other states may soon follow.

The U.S. Chamber of Commerce used the weak number to call for an end to the $300 supplemental unemployment benefit included in President Joe Biden’s most recent stimulus package.

“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” the business group said.

For progressives, the report suggested that corporate America has to step up and offer higher wages and that more government intervention is needed, especially with increased child care benefits, to help workers take the millions of jobs that are open. The dismal number could also mean that workers remain hesitant to return to in-person jobs because of Covid-19 even amid the vaccination campaign.

Or the number could mean nothing much at all.

Monthly jobs numbers, especially coming out of deep recessions, can be highly volatile. And any single number can turn out to be an anomaly reversed in subsequent months. Most other data suggest both a strong recovery and a vibrant labor market. Job creation for May could wind up being far stronger and the April number could be revised higher. In August of 2011 for example, the economy created exactly zero jobs, raising fears of a double-dip recession that never materialized. Steady job growth continued the following month.

So economists suggested caution in drawing any firm conclusions from the weak April figure.

“There is nothing definitive here and we will know a lot more after the May numbers and we’ll find out whether something real is happening or this is just noise and problems with seasonal adjustments a year after Covid first hit,” said Ian Shepherdson, chief U.S. economist at Pantheon Macroeconomics. “People with big mouths can bang the table and say they know exactly what happened but they don’t and we won’t know for a while.”

White House officials strongly rejected the idea that enhanced jobless benefits are keeping people from going back to work and leaving employers with millions of unfilled positions.

“Still don’t see strong evidence of that,” Council of Economic Advisers member Heather Boushey said on MSNBC. “We are not seeing that there are a lot of folks who are not searching because of unemployment benefits. Indeed as this report shows, there was an uptick in labor supply last month, and it still remains a difficult labor market for millions of workers.”

Congress extended several emergency unemployment benefits programs through September as part of Biden’s massive March rescue plan, including Federal Pandemic Unemployment Compensation which provides jobless workers with an extra $300 a week in benefits. Some Republican governors have already chosen to cut off the programs to tackle what they call a labor shortage in their states, arguing that the additional aid and the fact that the program doesn’t end until September are keeping workers on the sidelines.

“This labor shortage is being created in large part by the supplemental unemployment payments that the federal government provides claimants on top of their state unemployment benefits,” South Carolina Gov. Henry McMaster said this week. “What was intended to be a short-term financial assistance for the vulnerable and displaced during the height of the pandemic has turned into a dangerous federal entitlement.”

McMaster, following Montana’s Governor Greg Gianforte, announced this week that his state would no longer participate in the pandemic unemployment programs. Georgia and Wyoming officials are also weighing whether to drop out, spokespersons for the states told POLITICO.

Quint Forgey and Louis Nelson contributed to this report.


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