At this rate, it won’t be long before the job market is back to where it was before COVID-19 changed everything.
- The U.S. economy added 428,000 jobs in April, keeping pace with the gain in March. All major sectors added workers.
- At this pace, the country will have recovered all 22 million jobs it lost in the pandemic by summer.
- The unemployment rate stayed at 3.6%.
- Average pay continued to increase, but at a slightly slower pace.
The U.S. economy added 428,000 jobs in April, keeping pace with its March gain and more than fulfilling the 400,000 jobs economists had expected, the Bureau of Labor Statistics said Friday.Although the pace of growth in March and April was the smallest in recent months, the steady contributions mean the U.S. is only about 1.2 million jobs shy of restoring all 22 million jobs lost in the pandemic and could reach a full recovery by summer.
While the unemployment rate stayed at 3.6% (not quite the pre-pandemic level of 3.5% economists had forecast), they were encouraged that every major sector added jobs in April, including leisure and hospitality, transportation and warehousing, and manufacturing.
The new data highlights the two-faced nature of the current economy. Job listings are plentiful and employers are desperate to hire in many sectors, but even the big pandemic-era increases in average wages aren’t keeping up with rapidly rising prices for gas, groceries and other essentials. The average hourly wage is up 5.5% over the past 12 months, not nearly enough to keep pace with inflation running at 8.5% (and made worse by a slightly slower pace of growth in April).
"The job market is continuing to plow forward undeterred, buoyed by strong employer demand," Daniel Zhao, senior economist and lead data scientist at employment website Glassdoor, said in a commentary.
Validation that the job market remains healthy will only encourage the Federal Reserve to continue raising its benchmark interest rate in order to put the economy back into balance and tamp down inflation, economists said. The Fed has pointed to plentiful jobs as evidence that it should be able to achieve a so-called soft landing. In other words, dampen spending without causing the economy to plunge into a recession.
There were a couple of weak spots to be found in the data. The number of people working or looking for jobs—that is, the total workforce—shrank by 363,000, bringing the labor force participation rate down to 62.2%, and marking the first backtrack away from the pre-pandemic baseline of 63.4% in 11 months.
And the degree of job growth in leisure and hospitality provided mixed signals. While 78,000 jobs were added by restaurants, hotels, and other employers in that sector—the most of any major sector contributing to the April job growth—it was the smallest number in more than a year. There were still 1.44 million fewer of those jobs than before the pandemic, more than the net deficit for all sectors.
On the one hand, the relatively small number of additional leisure and hospitality jobs is a sign of how difficult it is for employers to fill all the positions needed to meet the demand. On the other, it’s encouraging for workers who are looking for leverage when negotiating pay and benefits.
Are Higher Wages a Catch-22?
The rising average wage, which reached $31.85 in April, is somewhat of a Catch-22, according to some economists. It’s helping defuse inflation’s impact on household budgets, but also potentially adding to inflation by bolstering demand and spending.
“The labor market remained strong in April,” Diane Swonk, chief economist at Grant Thorton, wrote in a commentary. “That is a blessing and a curse.”
The theory that higher wages are propelling inflation is far from unanimous, however. According to an April analysis by Josh Bivens, director of research at the Economic Policy Institute, a progressive think tank, less than 8% of the price increases instituted by nonfinancial corporations since the pandemic hit can be attributed to wage increases, compared to over 60% in the 40 years leading up to the pandemic. In fact, 54% of the pandemic price increases have gone to increased profit margins, Bivens found.
Indeed, April’s solid job growth only heightened the contradictions of an economy that some say is poised to plunge into a recession soon, a casualty of the Fed’s anti-inflation battle. Other gloomy developments include gross domestic product shrinking in the first quarter, and the stock market taking a pummeling.
“The outlook for the US economy is highly uncertain, but the labor market continues to be a source of strength,” Nick Bunker, economic research director for North America at the Indeed Hiring Lab, wrote in a commentary.
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