EXPLAINER: 5 key takeaways from the March jobs report
WASHINGTON — Strong hiring, big wage increases and steep price increases are drawing more Americans into the job market. The trend, if it continues, would mean long-awaited relief for companies desperate to fill jobs.
The number of people working or looking for work has still not fully recovered from the massive layoffs that followed the eruption of COVID-19. But Friday’s jobs report showed it was clearly heading in that direction. A sustained increase in the number of people looking for work could eventually cool the meteoric wage gains of the past year, allay Federal Reserve concerns about runaway inflation, and perhaps even bring the economy to a head. more sustainable growth trajectory.
If so, that would represent an impressive outcome given the series of economic uncertainties that threaten to undermine growth, from a spike in inflation aggravated by Russia’s invasion of Ukraine to the ever-damaging effects from COVID to the Fed interest rate series that just started. hikes, which are shaping up to be the most aggressive in years.
Friday’s government jobs report for March also showed businesses and other employers added 431,000 jobs last month and the unemployment rate fell to 3.6%. This rate is only slightly higher than the pre-pandemic unemployment rate of 3.5%, the lowest in five decades.
Here are five key takeaways from the jobs report:
LABOR SHORTAGES TACKLE
After the pandemic hit the US economy in the spring of 2020, pushing 22 million people out of work, many Americans seemed reluctant to return to low-paying jobs in restaurants, hotels and other service businesses, especially then that COVID was still raging. Employers have posted millions of jobs that have not been filled.
Now, however, with wages rising at their fastest pace in decades and COVID steadily waning, Americans are returning to the workforce at the fastest pace in 20 years.
This is seen most clearly among so-called prime-age workers, aged 25 to 54, whom economists track because they mainly exclude students and those likely to be retired.
80% of people in this age group are now employed, which is not far from the figure of 80.5% before the pandemic. By April 2020, the figure he had sunk below 70%.
“We are well off in stark contrast to pre-pandemic levels,” said Indeed Hiring Lab economist Nick Bunker. “We could be there in a few months.”
WOMEN ARE RETURNING TO THE WORKFORCE
With the reopening of schools and the resumption of child care, women have also accelerated their return to the labor market. During the pandemic, women – especially mothers – were more likely to lose their jobs or quit and drop out of the workforce altogether.
However, this trend reversed sharply in March. Of the 418,000 people who found work or started looking for work that month, about three-quarters were women. The proportion of women who have a job or are looking for one jumped to 76.5% in March, up seven tenths from the previous month and not far from the pre-pandemic level of 76.9%.
The equivalent figure for men is much higher, at 88.7%, but it’s also about half a point lower than it was pre-COVID.
A HIGH SALARY WILL KEEP THE FEDERAL RESERVE ON THE EDGE
As consumers spend steadily and the economy grows at its fastest pace in nearly four decades, businesses are desperate to fill a record level of job vacancies. Businesses large and small have raised wages to find and keep workers.
In March, the average hourly wage, excluding supervisors, jumped 6.7% compared to a year earlier, matching the annual rate of January and February. With the exception of two months distorted by the pandemic, these are the largest annual gains in four decades.
While these healthy increases are great for workers, they are fueling the biggest spike in inflation since the early 1980s. Unless companies find ways to make their operations more efficient, they will pass on at least some of their higher labor costs on customers in the form of higher prices.
On a monthly basis, wage gains have slowed over the past three months, Bunker said, suggesting wage increases may have peaked.
Still, the Fed is widely expected to raise its short-term benchmark rate by half a percentage point at its May and June meetings. These would be the Fed’s first half-point rate hikes since 2000, and would be a sign of how quickly Fed Chairman Jerome Powell wants to start cooling the economy to contain inflation. .
MOST INDUSTRIES HAVE RECOVERED ALL THEIR JOBS
Of 11 major industries in the US economy, six have regained all the jobs they lost during the pandemic recession. Most other industries are pretty close.
The only exception is leisure and hospitality, which includes restaurants, bars, hotels, amusement parks and other forms of leisure. One of America’s largest employers, leisure and hospitality still has 1.5 million fewer jobs than before the pandemic, down 8.7%.
The changes also provide insight into how the economy has evolved over the past two years. The industry with the biggest percentage gain was transportation and warehousing, which now has 10% more jobs than before the pandemic. This increase reflects the strong increase in online shopping over the past two years.
RACIAL GAPS HAVE SHRINKED, BUT STILL PERSIST
The nation’s most stubborn racial unemployment gap — that between black and white workers — narrowed a bit in March. Unemployment for black Americans fell to 6.2% from 6.6%, while for whites it fell to 3.2% from 3.3%. That three-point gap is smaller than a year ago, when black worker unemployment was 9.5% and white unemployment was 5.3%.
Yet unemployment among black workers remains nearly double that of whites, a long-lasting ratio that William Darity, an economist at Duke University, called “a powerful index of discrimination.”