KANSAS CITY – With an unprecedented surge in job losses, the baking industry had good cause to expect lessening tightness in the labor market. The seriousness of the economic picture was highlighted in recent congressional testimony by Jerome H. Powell, chairman of the Federal Reserve. “Nearly 20 million jobs have been lost on net since February, and the reported unemployment rate has risen about 10 percentage points, to 13.3%,” he said. “The decline in real gross domestic product this quarter is likely to be the most severe on record.”

To date, the economic slump and job loss surge have not helped bakers find workers, a point emphasized in a recent investment presentation by Andrew P. Callahan, president and chief executive officer of Hostess Brands, Inc. “Despite the really high unemployment, labor is not as accessible as it should be for us,” he said. He attributed the disconnect to generous unemployment benefits and predicted the pool of job candidates would grow as the summer progresses.

While the likelihood of a rapid return toward full employment has been shrinking, the outlook for the labor market remains highly uncertain. Spikes in COVID-19 diagnoses in many populous states imperil the economic recovery and may give many workers pause when considering returning to the workforce. Generous unemployment benefits, which end in July, have deterred the unemployed seeking jobs but have been considered crucial to sustaining the economy. Providing a safety net without encouraging withdrawal from the workforce will be crucial as the pandemic continues its course.