The pandemic has led to all sorts of weird economic outcomes, as the American economy bounces back from a recession due to the Covid 19 pandemic, the recovery of the labor market is not smooth. Economists predicted that the American economy will add 1 million jobs in April 2021, however according to the monthly jobs report by the bureau of Labor Statistics, the economy added only 2,66,000 jobs in April. One of the major worries is demand deficit, although employers in leisure and hospitality sector added 3,31,000 jobs, however other sectors like transport and professional services shred a lot of jobs
There is bumpiness in the labor market recovery due to a massive reallocation of resources that is taking place in the American economy, employers are struggling to forecast demand and hire workers. In March Blommberg also reported that Delta airlines cancelled 100 flights due to a shortage of staff. McDonald’s is paying $50 to just turn up for a job interview
Although total job vacancies are running at their highest levels since the past 2 decades, still there is high unemployment in the US economy. Although the government is giving generous benefits to the unemployed of about $1400 per person, there is a time limit after which the people will stop receiving these benefits, therefore this cannot be a reason for unemployment. Economists are attributing this situation to 2 reasons; Fear is one, as the number of people who are refusing work due to Covid-19 was 2.8M in April. The industries facing acute labor shortages were health care, recreation and hospitality- involving plenty of person to person contact. Also the mismatch and reallocation of resources is another reason as there is a growth of opportunities in some industries but decline in others. An out of work factory laborer may take time to spot and secure a job as a sanitation worker and therefore the recovery of the labor market can take time.
-Kovidh Dhediya
