Painful Labor: Man vs “Machine” …

With turmoil in the jobs market, the data last week from the Labor Department recording only 266k net new jobs in April, meaningfully below whisper estimates of at least one million new jobs for the month, was followed by numerous accounts of what might have caused such a miss. Was it due to overly generous unemployment benefits? Fears of infection? Lack of childcare with so many schools still closed? Around the distant edges of the healthcare economy, we may also be seeing the impact of robotic process automation – arguably, the next “new new thing.”

What a paradox: since March 2020 BC (before Covid) the number of new job openings across the economy has increased 34% according to iCIMS, a recruiting platform, and yet as of mid-April, there were 16.9 million Americans receiving jobless benefits. At its peak in June 2020, this registered a staggering 32.4 million of an estimated 160 million working Americans. It is estimated that total employment has declined by 8.2 million people. Over 4.2 million people are considered “long-term unemployed” (more than 27 weeks), while 2.6 million people are unable to work as they are caring for someone who is ill or ill themselves. With the labor force participation rate now at 61.7%, the effective average hourly income was $30.17 in April with 35 hours worked on average each week. To put this in context, the federal unemployment benefits equate to approximately $15 per hour and are set to expire in September.

Data: FRED; Chart: (Read more...)