A record number of small businesses said they could not fill open jobs in April, adding to a growing national controversy over whether extra unemployment benefits are keeping scores of people from re-entering the labor force.
Some 44% of small businesses said job openings went unfilled in April, according the National Federation of Independent Business. The NFIB is the nation’s largest small-business lobbying group.
“Small-business owners are seeing a growth in sales but are stunted by not having enough workers,” said NFIB chief economist Bill Dunkelberg. “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth.”
A simmering debate over whether generous jobless benefits have discouraged people from returning to work boiled over Friday after the government reported that the U.S. added a paltry 266,000 new jobs in April.
Economists polled by Dow Jones and the Wall Street Journal had forecast an increase of 1 million new jobs, with some estimates ranging as high as 2 million.
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The U.S. Chamber of Commerce called on Washington to end a temporary $300 federal stipend that’s not set to expire until September after the disappointing jobs report. The chamber contended that about one in four unemployed workers earn more from government benefits than they would from their prior job.
Several Republican-led states reinstituted rules requiring unemployed residents to look for jobs, a requirement that had been suspended during the pandemic. And one state, Montana, decided to stop providing the federal benefits altogether.
More states might follow suit.
Read: Some states are cutting unemployment payments to push people back to work — are extra benefits really keeping Americans out of the labor force?
The idea of a labor shortage in the midst of a pandemic might have seem farfetched just several months ago. The U.S. lost more than 22 million jobs when the coronavirus first made its appearance in 2020 and even now it’s still missing 8 million jobs.
Yet the Biden administration successfully pushed for an extra $300 in weekly jobless benefits as part of a massive $1.9 trillion stimulus plan that passed in March.
The U.S. chamber, the NFIB and other business groups insist the increase in benefits has dissuaded many people from accepting jobs.
Republican leaders in Washington have sided with business groups and blamed the Biden administration for the weak April jobs report.
“If Joe Biden had done nothing, the jobs report would be greater and more people would be in work today,” House Minority Leader Kevin McCarthy of California said Sunday on Fox News.
Democrats in the White House and Congress said they saw little evidence that people were refusing to take jobs.
“There’s nothing in the data which would suggest that that’s the reason people are out of work,” Commerce Secretary Gina Raimondo said Sunday on CBS’s “Face the Nation.
Read: Unemployment claims drop below 500,000 for first time since pandemic
They said school closures have forced parents, especially women, to stay home to care for their kids. And they contend many people are still fearful of returning to work because of fear of the virus.
Whatever the case, many small and large businesses are increasing wages and benefits to try to attract workers in an effort to keep up with rising demand for their goods and services. The NFIB’s small-business optimism index rose 1.6 points in April to a pandemic high of 99.8 .
“Owners are raising compensation, offering bonuses and benefits to attract the right employees,” the NFIB’s Dunkelberg said.
Economists say higher wages — combined with the reopening of schools and the end of extra jobless benefits — will eventually draw people back into the workforce and ease any labor shortage.
“The market mechanism to clear this labor supply-and-demand imbalance is higher real wages,” said chief economist Scott Anderson of Bank of the West. “This would provide more incentive for folks who have exited the labor force to come back in, and for others to switch jobs to sectors where qualified labor is in short supply.”