Non-Farm Friday – Is America Working?

It's payroll time again.

We added 916,000 jobs in March (adjustments pending) and under 1M added will actually be a disappointment for April but I think the pace of hiring may have slowed somewhat.  Normal job growth is roughly 300,000 but we're adding back the 22M people who were laid off during the shutdown and, so far, we're still about 4M short and that's not including the normal growth we should have had. 

I know the ever-rising market makes us think the economy must be fantastic but it's not really.  Even with the endless stimulus, a lot of sectors are hurting and they are sectors that employ a lot of people like restaurants, movies, clubs.  We're getting back to normal but we're not normal yet and half the year has already gone by.   Fortunately, we've had $6Tn in stimulus measures in the first 4 months which is pretty much our entire GDP for 4 months – so who's going to notice a few holes in our economic ship?  

In fact, labor shortages now threaten to restrain what is otherwise shaping up to be a robust post-pandemic economic recovery. Some businesses are forgoing work, such as not bidding on a project, delivering parts more slowly or keeping a section of the restaurant closed. That reduces the pace of the economy’s expansion. Other companies are raising wages to attract employees, which could inflate prices for customers or reduce profit margins for owners.  Analysts say the labor shortages should ease over time as more potential workers are vaccinated, schools fully reopen and federal benefits expire, though the process could take months and the impacts are already being felt.

Companies are scrambling for workers.  Notice this McDonalds is offering a $500 sign-on bonus but still sells value menu items for $1.  Even if they make a 20% profit on those items, a new hire has to serve 2,500 of them before the restaurant just makes back the signing bonus and those of us who have worked in McDonalds know know that's about a month's worth of french fries or coffee as serving over  just over 100 per shift is as good as it gets. 

8:30 Update:  Oopsie!  Looks like I was right and the Economorons were…

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