Member Briefing May 9, 2022

May 9, 2022

Posted By: Harold King in Daily Briefing,

Manufacturing Adds 55,000 Jobs, Wage Increases Slowing

Despite persistent reports of a tight hiring market, U.S. manufacturing firms hired a healthy 55,000 more workers in April, up from 43,000 hired in March. The transportation equipment sector added an estimated total of 13,700 jobs, about half of which—6,100—were in motor vehicles and parts production. Machinery production added 7,400 jobs, and wood products, fabricated metal products and computer and electronic products also each added at least 3,000 new jobs. Food manufacturing, the largest segment in nondurable manufacturing, took in 7,900 more workers, while the plastics and rubber manufacturers added 5,700 more workers.

The latest figures show manufacturers pumping the breaks on wage increases. After increasing by 15 cents an hour between February and March, the average hourly wage in manufacturing rose only half that—7 cents—between March and April. It is now $24.78 an hour.

Invasion of Ukraine Headlines

U.S. Economy Added 428,000 Jobs in April, Participation Rate Falls

The U.S. economy added 428,000 jobs in April and the unemployment rate remained at 3.6%, marking the 12th straight month of job growth above 400,000. The stretch of employment gains is the result of a tight labor market that has held up despite rising interest rates, jittery stock markets and growing fears of a slowdown.

In one sign that the labor market remains exceptionally tight, the civilian labor force shrunk by 363,000 workers last month, the Labor Department said Friday. The labor force participation rate fell by 0.2 percentage point to 62.2%. The decline in the labor force level followed a gain of more than 400,000 in March.

DiNapoli Releases Analysis of 2022-23 Enacted State Budget

Historic federal aid and better-than-expected revenues allowed for a steep increase in spending in the $220.5 billion enacted state budget for State Fiscal Year (SFY) 2022-23, according to an analysis released today by New York State Comptroller Thomas P. DiNapoli. All Funds spending in SFY 2022-23 is projected to be 5.3% higher than actual results from SFY 2021-22 and nearly 27.5% higher than SFY 2019-20, the last full fiscal year before the onset of the pandemic, an increase of $47.5 billion over the period.

While some of the new spending will be temporary, much of the year-over-year growth will be for new initiatives and more funding for existing programs. DiNapoli expressed concerns about the growth in capital spending and debt. He also cautioned that many provisions weaken essential oversight and protections, leaving public resources more vulnerable to misuse.

Read more at the Comptroller’s Website

US COVID – Cases, Hospitalizations Increase

The US CDC is reporting 81.4 million cumulative cases of COVID-19 and 993,341 deaths. The average daily incidence has more than doubled from the recent low of 24,843 new cases per day on March 29 to 61,712 on May 3. The daily mortality is beginning to increase, up to 325 deaths per day from a recent low of 306 deaths per day on April 29. With a now increasing trend in deaths, we expect the official number of COVID-19 deaths to surpass 1 million within the next 2 weeks. Notably, new COVID-19 hospital admissions continue to trend upwards, with an increase of 20% over the past week. New cases are being driven by the BA.2 subvariant of Omicron, with an increasing proportion of cases due to BA.2.12.1 sublineage.

The US has administered 577 million cumulative doses of SARS-CoV-2 vaccines. After a slight increase starting in late March, following US FDA authorization of a second booster dose, daily vaccinations are once again declining. A total of 258 million individuals have received at least 1 vaccine dose, which corresponds to 77.7% of the entire US population. A total of 220 million individuals are fully vaccinated, which corresponds to 66.2% of the total population.

NYS Vaccine and COVID Update – Cases, Hospitalizations Increase

Vaccine Stats as of May 6:

One Vaccine Dose

90.2% of all New Yorkers – 16,576,880
In the Hudson Valley 1,727,066

Fully Vaccinated

77.0% of all New Yorkers – 14,855,926
In the Hudson Valley – 1,516,867

Boosters Given

All New Yorkers – 8,160,205
In the Hudson Valley – 984,616

The Governor updated COVID data through May 6. There were 12 COVID related deaths for a total reported of 70,946

Hospitalizations:

Patients Currently in Hospital statewide: 2,187
Patients Currently in ICU Statewide: 198

7 Day Average Positivity Rate – Cases per 100K population

Statewide 6.85% – 43.73 positive cases per 100,00 population
Mid-Hudson: 7.35% – 39.98 positive cases per 100,00 population

Useful Websites:

FDA Puts Strict Limits on Johnson & Johnson Covid-19 Vaccine

The US Food and Drug Administration announced Thursday that it is limiting use of the Johnson & Johnson/Janssen Covid-19 vaccine to people 18 and older for whom other vaccines aren’t appropriate or accessible and those who opt for J&J because they wouldn’t otherwise get vaccinated. The change is being made because of the risk of a rare and dangerous clotting condition called thrombosis with thrombocytopenia syndrome (TTS) after receiving the vaccine.

The FDA says it has determined that the benefits of the J&J vaccine outweigh the risks for certain people. Examples of people who may still get the vaccine include:

Those who had a severe allergic reaction to an mRNA vaccine such as those from Pfizer/BioNTech or Moderna.
Those with personal concerns about the mRNA vaccines who would remain unvaccinated without the J&J vaccine.
Those with limited access to mRNA Covid-19 vaccines

WHO: Nearly 15 Million Deaths Associated With COVID-19

The World Health Organization estimates that nearly 15 million people were killed either by coronavirus or by its impact on overwhelmed health systems during the first two years of the pandemic, more than double the current official death toll of over 6 million. Most of the deaths occurred in Southeast Asia, Europe and the Americas, according to a WHO report issued Thursday.

WHO tasked scientists with determining the actual number of COVID-19 deaths between January 2020 and the end of last year. They estimated that between 13.3 million and 16.6 million people died either due to the coronavirus directly or because of factors somehow attributed to the pandemic’s impact on health systems, such as cancer patients who were unable to seek treatment when hospitals were full of COVID patients.

Worker Output Fell 7.5% in the First Quarter, the Biggest Decline Since 1947

Worker productivity fell to start 2022 at its fastest pace in nearly 75 years while labor costs soared as the U.S. struggled with surging Covid cases, the Bureau of Labor Statistics reported Thursday. Nonfarm productivity, a measure of output against hours worked, declined 7.5% from January through March, the biggest fall since the third quarter of 1947.

At the same time, unit labor costs soared 11.6%, bringing the increase over the past four quarters to 7.2%, the biggest gain since the third quarter of 1982. The metric calculates how much employers pay workers in salary and benefits per unit of output.

Bank of England Raises Rates by 25 Basis Points to 1%, a 13-Year High

The Bank of England sent a stark warning that Britain risks a double-whammy of a recession and inflation above 10% as it raised interest rates on Thursday to their highest since 2009, hiking by quarter of a percentage point to 1%. The pound fell by more than a cent against the U.S. dollar to hit its lowest level since mid-2020, below $1.24, as the gloominess of the BoE’s new forecasts for the world’s fifth-largest economy caught investors by surprise.

Central banks are scrambling to cope with a surge in inflation that they described as transitory when it began with the post-pandemic reopening of the global economy, before Russia’s invasion of Ukraine sent energy prices spiraling. The BoE said it was also worried about the impact of renewed COVID-19 lockdowns in China which threaten to hit supply chains again and add to inflation pressures.

5 Employer Strategies to Help With Soaring Inflation

Employees have recently looked to their employers for help with everything from the pandemic to social justice issues to the war in Europe. Now they’re looking for help with the latest struggle: record-high inflation. It’s not surprising: Inflation rose 8.5% year-over-year in March, the highest inflation rate since 1981.

“There’s a lot of stress from employees. It’s certainly top of mind; [inflation] is something that employees are concerned about,” says Tony Guadagni, senior principal in the Gartner HR practice. So how can employers help? Here are some strategies for HR leaders to consider.

U.S. Weekly Jobless Claims Rise

The Labor Department reported Thursday that Initial claims for state unemployment benefits rose 19,000 to a seasonally adjusted 200,000 for the week ended April 30, the highest since mid-February. Economists polled by Reuters had forecast 182,000 applications for the latest week.

Claims at 200,000 are viewed as consistent with strong demand for workers. They have declined from a record high of 6.137 million in early April 2020.
The number of people receiving benefits after an initial week of aid dropped 19,000 to 1.384 million during the week ending April 23. That was the lowest level for the so-called continuing claims since January 1970.

The report also showed the number of Americans collecting state unemployment checks was the smallest in more than 52 years towards the end of April. Economists brushed off last week’s increase in initial claims, arguing that the data are volatile around moving holidays like Easter, Passover and school spring breaks.

Chaos at Apple Supplier Shows Strains of Shanghai COVID Lockdown

Quanta Shanghai Manufacturing City would seem like an ideal site to implement China’s “closed-loop” management system to prevent the spread of COVID that requires staff to live and work on-site in a secure bubble. But as COVID-19 breeched Quanta’s defenses, the system broke down into chaos last week. Videos posted online showed more than a hundred Quanta workers physically overwhelming security guards in hazmat suits and vaulting over factory gates to escape being trapped inside the factory amid rumours that workers on the floor that day tested positive for COVID.

The turmoil at Quanta underscores the struggles Shanghai faces to get its factories, many of them key links in global supply chains, back up to speed even as much of the city of 25 million remains locked down under China’s “dynamic-zero” COVID policy.

Extended Supply Chains Are Going Away: What Comes Next?

Before the pandemic, rising costs were already making offshoring an expensive and increasingly riskier proposition. Significant increases in wages, transport costs, as well as real fears over continued intellectual property theft and poor-quality control offset many savings advantages from offshore manufacturing.

While champions of “bringing it back home” are understandably excited about the prospects of an American manufacturing renaissance, some challenges need to be addressed. Most obvious is the return of significant long-term inflation within the economy. Now that most of the benefits of offshoring are used up, we are faced with a reckoning. Any inflation within the manufacturing/ delivery/ sales cycle will be immediately felt. It can’t be outsourced to the future. In fact, it is already being felt. What is now popularly labeled as a “supply chain issue” in most cases is simply a return to the natural order of things. Despite the challenges that long-term inflation will pose, more companies have little or no choice but to get closer to home.

Injury Claims by First-Year Employees has Increased, Mfg

Reported injuries in an employee’s first year on the job increased between 2011 and 2021, with 38% of workers’ compensation claims filed by first-year employees in 2021 versus 32% of first-year employees filing claims in 2011.

In the manufacturing and wholesale sector 42% of workers’ compensation claims were filed by first-year employees in 2021 versus 31% of claims filed by first-year employees in 2011. “To minimize risks, all employers must ensure new employees receive orientation on workplace risk management including safety hazards, emergency response plans, and safe driving expectations if company vehicles are operated,” said Scott Smith, vice president, Director of Safety Management, Selective Insurance, in a statement.

Snarled-Up Ports Point to Worsening Global Supply Chain Woes

Global supply chain problems look to set to worsen, a new report published last week said, as China’s COVID-19 lockdowns, Russia’s invasion of Ukraine and other strains cause even longer delays at ports and drive up costs. The study by analysts at Royal Bank of Canada (RBC) found that one-fifth of the global container ship fleet was currently stuck in congestion at various major ports.

In China, ships awaiting berth at the Port of Shanghai now tally 344, a 34% increase over the past month, while shipping something from a warehouse in China to one in the United States currently takes 74 days longer than usual. In Europe too, ships from China are showing up an average of four days late, causing a number of knock-on effects, including a shortage of empty containers to take European-made goods to the U.S. east coast.