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Why is hiring so hard right now?

Help wanted sign hanging on glass door due to slow hiring recovery after COVID-19

The headlines are impossible to miss: it’s really hard to hire right now. There just aren’t enough people actively looking for work. Take a walk down Main Street and there are help wanted signs just about everywhere.

This is a challenge we’ve been watching closely over the last few months as part of UKG’s Workforce Activity Report project, where we’ve been analyzing trends in employee shift work volume during the course of the pandemic to understand  the recovery and help policy makers and economists predict what might happen next.

Job growth was a huge disappointment in April. With the addition of only 266,000 jobs, the unemployment rate unfortunately rose to 6.1 percent. This is a far cry from the historic 15 percent unemployment that the US experienced during the first wave of the COVID-19 pandemic, when Americans were urged to stay at home and non-essential functions of the economy were largely shut down. Still, some experts were predicting as many as a million new jobs. That’s a huge miss.

So what's going on? From my vantage point, the reason isn’t as complicated as you might think.

Normal is near, but not here yet

With around 8 million folks who were working before the pandemic that are still not yet back to work today, you’d think help wanted signs would be few and far between. Sure, extended unemployment benefits may be keeping a few folks at home, but the reality is over the last year many people reshaped their entire lives to adapt to the unprecedented circumstances we were facing.

The impact of the pandemic on women, especially, has been well-documented. Women were forced to exit the workforce at much higher rates than men as they sacrificed their own careers when childcare centers closer and schools went to virtual learning. Families adjusted to make this arrangement work — many budgeted accordingly in anticipation of a reduced household income indefinitely.

While kids may be back in school in most places, it’s unfair and inaccurate to say the situation is the same as it was in February 2020. There are still fully remote models being deployed in parts of the country. Other districts are still relying on hybrid learning. Even for those that are back to full-time, in-person learning, kids may not be riding the bus, or they may not have access to before- and after-school programs like they did in the past.

Why we may be waiting until September

With just a month left in the school year, and with the lives of their children already disrupted in a multitude of ways over the last 14 months, many have made the decision to stick it out with their current arrangements vs racing to take the first job they can find.

The end of the school year may not allow these families to return to the workforce, either. With many summer camps operating with modifications, we suspect it could be September before COVID-related childcare arrangements are replaced with pre-pandemic arrangements, truly freeing up many employees to return to work.

When we look at which industries are doing well and which are still struggling a bit, we see this dynamic play out.

For example, industries that are able to hire much younger workers — think about restaurants, hospitality, grocery stores — are recovering at a slightly faster rate than industries like manufacturing. That’s because the employees that are required to work in these more skilled positions tend to be older and are more likely to have a hard time juggling their childcare and family obligations.

Previewing May's jobs report

While the UKG team was rooting for a huge jobs report number in April, we weren’t surprised by the “downside surprise” that seemed to catch many experts off guard. That’s because we’re watching shift work week-by-week to understand the conditions that businesses are operating in, in near real-time.

For the month of April, we saw negative shift growth, meaning the volume of shifts being worked actually declined relative to March. This signaled to us that a million new jobs weren’t coming, because adding a million new employees to the economy would have caused much more rapid shift growth.

 

Workforce Activity Report April 2021 line graph showing new employment vs shifts worked trend

Looking a layer deeper, employment for women actually dropped from March to April. This reinforced the unequal recovery playing out between genders.

While April was bad news, there is some marginally good news on the horizon. When we align UKG shift data to the Bureau of Labor Statistics (BLS) reference week used to calculate monthly employment gains, we did see modest shift growth.

While UKG shift growth was a only 0.1 percent for the BLS reference week, shift work growth has continued to accelerate. For the week ending May 22, shift volume was up 0.9 percent. We’re very encouraged by the growth we’re seeing, which leads us to believe employment gains will perform better than April, but likely not as strong as we saw in March when 916,000 new jobs were added to the economy.

Conclusion: Keeping up with workforce activity is still critical

If you’re interested in learning more about UKG’s Workforce Activity Report, you can visit UKG.com/workforceactivityreport, where you can find our report archive dating back to the beginning of the pandemic. You can also subscribe to receive our monthly reports, which are issued each month prior to the jobs report.

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