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The Jobs Report Is Looking Good, But There’s a Catch

Hiring is up, but not fast enough to keep up with consumer demand.

The beginning-of-the-pandemic shortage of everything from face masks to dumbbells to meat has been replaced by a shortage of workers at the barbershops, restaurants, and hotels currently experiencing a surge in business. Economists say GDP is rising, and that employment levels are too, which is great news for people who are looking for work after COVID-19 decimated the economy. The problem, though? Workers are being hired at a slower rate. But what does that mean?

For families, that could mean longer waits everywhere, from recently reopened restaurants to the security line at the airport. Indeed, it seems that we’re in for consumer demand to outstrip labor participation through the rest of the year. Here’s what that means — and why it matters to families.

The Economy is Heating Up Again — Why?

There are lots of reasons. More than half of Americans are at least partially vaccinated against COVID-19, meaning that more people are likely comfortable going out into the world than have been for over a year. And states and cities are largely loosening the restrictions on dining, entertainment, and other industries as vaccination rates go up.

And while it’s hard to understate the economic devastation wrought by COVID-19, it’s also true that many people kept their jobs and likely saved money on things like commuting and dining out. Add into that equation the stimulus payments folks have received, and many people have some disposable income they are eager to dispose of.

Why aren’t there enough workers?

Many workers were laid off as the pandemic hit, so the companies that exist to meet the increasing needs of consumers have been scrambling to increase their staffing levels. Hiring increased in every state but one last month, driven by strong job growth in the leisure and hospitality sector.

But many workers aren’t exactly eager to return. For one, COVID-19 rates are still rising in many places, and any return to work entails a medical risk to themselves and their families that many workers aren’t eager to take. Federal unemployment insurance was also just extended again, meaning that minimum wage workers, who are paid at levels that do not meaningfully provide for rent, food, and life, very likely have more money coming into their households now than they did when they were working.

Unless employers offer to start paying their workers more, there’s no reason for many workers to return to work at the moment. If you can make more money not working at the Albequerque Sonic captured in the viral tweet below than you can make working there, then why would you go back?

It’s also worth mentioning that some companies are also holding off on full (re)hiring, as they want to make sure that the demand for their products and services is consistent enough to justify taking on additional labor costs.

How can things get back to normal (whatever that is)?

Economists expect employers to add 7.1 million jobs this year, a figure that would leave employment 1.6 percent lower than it was in the fourth quarter of 2019 (that last pre-pandemic quarter). Getting back to pre-pandemic levels of employment is a decent metric for a “normal” economy, and it looks like that won’t happen until 2022 at the earliest.

The bottom line is that it’s not currently worth it for enough employees and employers to reestablish their pre-pandemic levels of labor participation, so it’s not going to happen. If consumer demand continues to increase and federal unemployment insurance isn’t extended again that calculus will likely change.