As the U.S. economy continues to reopen from the COVID-19 pandemic, initial unemployment claims fell below 400,000 for the second time since pandemic lockdowns began. On June 24, the Labor Department reported initial not seasonally adjusted unemployment claims fell by 14,720 to 393,078 from 407,798 the week before. Claims reached their 2021 high of nearly 1.1 million for the week ending January 9, 2021.
In May, the U.S. economy generated 559,000 million new nonfarm jobs, and the unemployment rate dropped to 5.8% from 6.1% in April. While new job growth is a good sign for the economy, the number didn’t reach expectations. Seeing demand in the economy to warrant a large job gain, economists anticipated new job growth in May to be 671,000. For April, there were 266,000 nonfarm jobs, well behind the nearly 1 million jobs expected. “We lost 22 to 23 million jobs between March and April of last year,” says Bret Biggers, ISRI’s senior economist. “Now we’re evening out, but there’s still around 9 million people unemployed and over 9 million job openings.”
In the recycling industry, there are many open positions in materials recovery facilities (MRF), mills, and other locations. MRFs experience high turnover for their employees, mainly sorters, Biggers says, adding, “But it’s never been like this in recent memory. Sixteen months ago, these positions were filled.” Currently, mills are not experiencing the same labor shortage as MRFs. Biggers is aware of several MRFs reporting their operations are tight. “I talked to a supplier recently, and it’s trying to figure out how to supply paper to the manufacturers; the MRFs can’t produce enough,” he says. “Part of that is because MRFs currently don’t have the employees to sort, separate, and get things ready for shipping.”
It’s evident that recyclable materials are coming in from consumers through online purchases that typically travel in corrugated/carton or paper/plastic envelopes, and using paper products either at home or the office. In May, the National Retail Federation (NRF) forecasted non-store and online sales to grow 18% to 23% for 2021, or $1.09 to $1.13 trillion. But for some reason it’s not reaching the next level. “The bottleneck may be at the MRFs,” Biggers notes.
It’s possible that U.S. employment isn’t where it needs to be to continue the economy at its current growth. In June, the Federal Reserve Board raised its GDP projection for 2021 to 7.0% from 6.5% in March. However, its unemployment rate projection remained unchanged at 4.5%. “Would GDP be higher if employment would grow faster? A potential answer may lie in the Personal Consumption Expenditures (PCE) price index,” Biggers says. An indicator the Fed uses to set policy, PCE measures prices that people living in the U.S., or those buying on their behalf, pay for goods and services. In May, the Federal Reserve Board increased their PCE estimate to 3.4% from 2.4% in their March estimate, which suggests demand is outpacing supply, Biggers says. “Hence, if supply were greater, inflation would decrease. If employment were up a faster rate, then supply would increase also, thereby adding a downward pressure on inflation,” he says.
Though unemployment was lower than projected, the good news is employment continues rising. “The number is going up; we’re not losing jobs, so it’s good overall,” Biggers says. New employment numbers will be released Friday, July 2.