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The workforce added just 266,000 new jobs in April—what that means for workers

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Just 266,000 nonfarm payroll jobs were added to the U.S. labor market in April, according to the Department of Labor monthly jobs report released Friday. That number is far below the estimated 1 million new jobs projected by Dow Jones, surprising economists and analysts who expected a healthy number of gains as more Americans get vaccinated and businesses reopen during the ongoing pandemic.

By comparison, the labor market added 770,000 jobs in March and 536,000 jobs in February.

"Today's report was an enormous surprise and shows the labor market hit a hidden pothole in April," Glassdoor senior economist Daniel Zhao tells CNBC Make It. "Clearly, the labor market has decelerated quite a bit."

The 6.1% unemployment rate and 9.8 million people unemployed remained steady in April compared with the months prior. Economists say today's snapshot is much better than exactly a year ago, but improvements are leveling off while rates of joblessness remain well above pre-pandemic levels.

Where jobs were added

Some of the biggest gains in jobs occurred in the leisure and hospitality industry, which added 331,000 new jobs in April. Hiring happened across restaurants and bars; gambling and recreation; and accommodation.

Gains also happened across local government education, as schools reopened and rehired teachers as well as office administration and support roles. The social assistance industry saw a boost in child care services jobs, as facilities nationwide welcomed kids back in-person.

The financial industry saw jobs increase across real estate and rental leasing; in "other services," workers filled roles in maintenance repair and laundry services.

Where jobs were lost

Gains elsewhere in the labor market did little to offset major losses. The worst performing industries for the month include temporary help services jobs, which lost 111,400 positions last month. This could indicate that staffing firms are having trouble finding businesses that want to hire temporary workers, Zhao says, which could be an indicator of labor shortages or that workers are holding out for permanent jobs during the market recovery.

Transportation and warehousing, which remained strong during market upheavals last spring to keep pace with skyrocketing e-commerce demand, shed 74,100 workers in April, most being couriers and messengers. Zhao says any patterns here remain unclear but may be an early sign that consumers are going back to the store and relying less on online shopping and delivery.

Some groups are still disproportionately out of work

Improvements in the labor market aren't helping everyone equally.

More women left the labor force than joined it in April, for the first time since January. About 165,000 women weren't working or looking for work last month, compared with 355,000 men who joined the workforce. Experts say this points to continued challenges for women, who disproportionately take on care-giving responsibilities, in finding stable and accessible child care in order for them to return to work.

The unemployment rate for Black workers rose slightly and at 9.7% is the highest among any racial group, compared with 7.9% for Latinos, 5.7% for Asians and 5.3% for white workers. Black, Latino and Asian workers have had a harder time recovering jobs lost to the pandemic compared with white workers in the last year.

And more than a year into the pandemic, 4.2 million people are considered long-term unemployed, meaning 43% of people out of work have been without a job for six months or more.

What needs to happen for jobs to rebound

With April's numbers, the U.S. economy is still down 8.2 million jobs today compared with pre-pandemic jobs.

Zhao says some employers and state and local officials may interpret today's jobs report as an indication of a labor shortage, where there are more open jobs than there are workers to fill them. With that said, he finds it surprising that while most anecdotes of labor shortages are coming from employers in leisure and hospitality, that's the industry that saw the biggest gains last month. But it's also possible those gains could have been even bigger if not for other factors holding the economy back, he adds.

"We have to remember that the pandemic is still going on," Zhao says. "The public health situation has improved dramatically from the winter, but we still have high case counts on a daily basis."

Further, says Jason Furman, an economist at Harvard University and a former Obama administration advisor, the issue could be "just as much about a shortage in labor supply as it is about a shortage of labor demand." He told CNBC that in April, "it appears that there were about 1.1 unemployed workers for every job opening. So there are a lot of jobs out there, there is just still not a lot of labor supply."

Still, Zhao says this debate could lead to more states voluntarily ending their pandemic unemployment programs, which some say incentivizes workers to stay on enhanced benefits rather than take a new job. Montana and South Carolina have already announced upcoming cutoffs of these programs in their state, even though the $1.9 trillion American Rescue Plan offers expanded benefits through Labor Day.

Research indicates hesitancy to take a job has more to do with health concerns of the virus than the benefits of jobless programs. Other analysts say workers are reconsidering the types of jobs they're now looking for, such as ones with better pay or more flexibility; roles that use different skillsets; or openings in industries that are more stable.

"The best economic stimulus is ultimately the vaccine," Zhao says. As of Monday, roughly 104.7 million Americans age 18 and older, or 40.6% of the total adult population, are fully vaccinated, according to the CDC.

In a statement, U.S. Secretary of Labor Marty Walsh said April's jobs numbers underscored that policies included in the American Rescue Plan are essential to economic recovery: "It's increased the speed and access of vaccinations, it's bringing needed relief to families, it's enabling daycare centers and schools to reopen, and it's supporting small businesses. It's going to take time and effort to heal this economy."

Check out: ‘I’m putting my entire life on hold’: How workers are grappling with Covid burnout

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