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Hiring snarls emerge amid US economic recovery

·3-min read

With only 260,000 jobs added and the unemployment rate rising slightly to 6.1 percent, the April Labor Department employment report was a letdown for the United States.

Here are a few reasons why hiring in the world's largest economy may have slowed down last month as it looks to recover from the mass unemployment caused by the Covid-19 pandemic:

- Generous government jobless aid -

There is no doubt unemployment is widespread in the United States.

The monthly employment report said the economy was short 8.2 million jobs it had in February 2020 before the pandemic hit.

Weekly Labor Department data on jobless benefits showed nearly 16.2 million people receiving government unemployment aid as of mid-April.

Successive rescue measures passed by Congress have expanded the unemployment safety net and increased weekly benefit payments. But the Republican opposition and some businesses now say that extra aid is giving unemployed people an incentive to stay home rather than work.

Employers complain they're getting few takers for low-wage work in particular, which they say is a consequence of the extra $300 weekly benefit approved in an aid package passed in March.

Some states are trying to find ways around this. Montana said it will give unemployed workers who accept a job $1,200.

In the private sector overall, the Labor Department reported salaries increased three percent in the first quarter of this year compared to the same period in 2020.

- Fewer part-time jobs -

The number of part-time employees fell by a sharp 583,000 in April, perhaps signaling that employers prefer to increase the hours of their current employees than hire new ones.

- Childcare challenges -

Schools and daycare centers remain closed or only partially operational in parts of the United States, particularly cities, even as Covid-19 case counts decline.

That's forced some parents to stay at home to look after their children, particularly those who do not have the option of working remotely.

Others are holding back from returning to their jobs or seeking out new work for fear of contracting Covid-19.

- Challenges persist for businesses -

There was good news for some employers in the monthly Labor Department data.

The leisure and hospitality sector added the most jobs with 331,000 positions, more than half of which were at food services and drinking places, like the bars and restaurants that laid workers off en masse when the pandemic began.

However, employment in the sector was nearly 17 percent lower than before the pandemic. Even as vaccinations become widespread, entering the United States remains complicated for foreign visitors, and businesses reliant on tourism face uncertain months to come.

Some sectors also remain broadly shut down, like entertainment venues.

There were also signs that challenges seen in supply chains globally as economies reopen were felt in US businesses.

Employment at motor vehicle and parts firms fell 27,000 in a month when American automakers announced production cuts due to a global shortage of semiconductors.