The United States has finally reported strong gains in payrolls after months of sluggish growth. However, in my view, the employment picture remains disappointing. Total non-farm payrolls have only recovered about 75% of the jobs lost during the pandemic.[i] The graphic below shows just how much payrolls have recovered from the steep losses during the pandemic, including a breakdown by sector.
The pandemic’s lingering effect on employment
I see three pandemic-related factors that have been holding back employment in the US.
1) Enhanced unemployment benefits. Some workers could be delaying a return to work while enhanced federal unemployment insurance remains available. Because the enhanced benefits are mostly tax-free, in some cases, they could generate a higher income than paid work that is subject to taxes. However, many states have started to curtail their participation in the federal program, which should help boost payrolls going forward.