Canadian Manufacturing

US adds 559K jobs as firms still struggle to fill positions

About 60% of Manpower's temporary placements are leaving their jobs before an assignment ends because they are receiving better offers.

June 4, 2021  by Associated Press

U.S. employers added a modest 559,000 jobs in May, an improvement from April’s sluggish gain but still evidence that many companies are struggling to find enough workers as the economy rapidly recovers from the pandemic recession.

Last month’s job growth was above April’s revised total of 278,000, the Labor Department said on June 4, yet well short of employers’ need for labor. The unemployment rate fell to 5.8% from 6.1%.

The speed of the rebound from the recession has caught employers off guard and touched off a scramble to hire. The reopening of the economy, fueled by substantial federal aid and rising vaccinations, has released pent-up demand among consumers to eat out, travel, shop, attend public events and visit with friends and relatives.

The result has been a disconnect between companies and the unemployed: While businesses are rushing to add workers immediately, many of the unemployed are either seeking better jobs than they had before the pandemic, still lack affordable child care, worry about contracting COVID-19 or have decided to retire early.

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That mismatch resulted in the sharp slowdown in hiring in April, when employers added far fewer jobs than economists had forecast and many fewer than had been hired in March. The mismatch appears to be easing only moderately for now.

“There is a gap between the economy and labor market,” said Nela Richardson, chief economist at the payroll processing firm ADP.

May’s job gains, she said, are “more lackluster than one would expect given the strong state of economic growth.”

Still, many economists expect hiring to catch up with demand in the coming months, especially as federal unemployment aid programs end and more people pursue jobs. In the meantime, many large chains, including Amazon, Walmart, Costco, and Chipotle, have raised starting pay to better attract applicants. So have other employers: Wages jumped in May for a second straight month, a sign of companies trying to attract more workers. And the average work week remained elevated, which suggests that businesses are working their current staffs for longer hours to try to meet rising customer demand.

Becky Frankiewicz, president of the temporary staffing firm Manpower Group’s North American division, said many of the firm’s clients are raising pay and benefits to try to attract more applicants. Some of these companies, particularly in manufacturing and warehousing, are also trying other tactics, like paying their workers weekly or even daily, rather than every two weeks. Manpower is also encouraging its clients to make job offers the same day as an interview rather than waiting.

About 60% of Manpower’s temporary placements are leaving their jobs before a temporary assignment ends, Frankiewicz said, mostly because they are receiving better offers.

“People have options,” she said. “Companies have to offer speed in cash, speed to hire and a lot of flexibility in how they work.”

For now, though, there are signs that many of the unemployed remain cautious about seeking jobs.