Strong job gains in March keep a flame under the recovery
By Talmon Joseph Smith
A continued torrent of consumer demand, paired with a decline in coronavirus caseloads and health restrictions, led to a burst of job creation last month, showing the staying power of the economic recovery.
U.S. employers added 431,000 jobs in March on a seasonally adjusted basis, the Labor Department said late last week. The unemployment rate was 3.6%, down from 3.8% a month earlier and just a touch higher than its levels right before the pandemic.
“It’s all about the virus, the virus, the virus — and the virus’s grip on the American psyche seems to have loosened,” said Austan Goolsbee, a professor at the University of Chicago and a chair of the Council of Economic Advisers under President Barack Obama. “And we may be moving toward the idea that ‘the COVID era’ of the U.S. economy is done.”
The economy has recovered more than 90% of the 22 million jobs lost at the peak of the pandemic’s lockdowns in spring 2020 — a far swifter rebound than forecasters initially expected.
The demand for workers is yielding strong wage growth, but price increases are casting a dour shadow. Inflation, the highest in decades, is being compounded by international events: Russia’s invasion of Ukraine is pushing up commodity prices, and COVID-19 outbreaks at key trade hubs in Asia are a fresh burden to supply chains.
After the report’s release, President Joe Biden emphasized the job gains under his administration. “Our policies are working,” he declared, citing “record job creation, record unemployment declines, record wage gains.” While underscoring the resilience of the recovery, he added: “This job is not finished. We need to do more to get prices under control.”
Wages climbed by a brisk 5.6% over the past year, the report showed, after annual increases of 2% to 3% for much of the 2010s. That could heat up price increases at a time when the Federal Reserve is trying to cool them down.
“By many measures, the labor market is extremely tight, significantly tighter than the very strong job market just before the pandemic,” Fed Chair Jerome Powell said in a recent speech. Powell has also called the current job market, in which there are 1.8 openings for every unemployed worker, tight to “an unhealthy level.”
Job openings and the number of workers voluntarily leaving their positions remain near record levels — measures showing that demand for workers is the highest in decades — and many employers have complained of a shortage of job candidates. A few months ago, some economists expressed concern that the pandemic might have pushed many workers, especially those at or near retirement age, to the sidelines permanently.
But with more than 400,000 people rejoining the labor force in March, the share of adults who were working or actively looking for work rose to 62.4%, just a percentage point below the level on the eve of the pandemic. Among people in their prime working years, those ages 25-54, the return has been even stronger.
Overall, recent data suggests that many workers who had been kept out of the labor force have been returning as pandemic-related factors ease. March represented the first full month since the omicron wave of COVID-19 faded in much of the country, and it produced job growth across most major industries.
Leisure and hospitality led the way, accounting for roughly one-quarter of the overall gains. That data spurred hope in the service sector that good times may be back and stick around more sustainably.
The Lobby, a brunch-focused restaurant in a tall yet homey late-19th-century building in downtown Denver, almost went out of business in 2020 before being rescued largely by emergency federal aid to small companies. Now, on any given weekend, it offers the sights, smells and sounds of an economic revival starting to get fully comfortable: a packed house of diners chatting away, leaning into each others’ ears in a way unimaginable 18 months ago.
The restaurant’s co-owner, Christian Batizy, is in a bullish mood about his business and the local economy overall. “We’re probably currently 25% above our best year,” said Batizy, who opened the spot in 2009.
“Those of us that made it through the pandemic have come out to an economy where people are a little more willing to spend money out,” he said, adding: “The gap between restaurant prices and cooking at home is closing with grocery store prices having gone up so much.” The cost of food at home increased faster last year than the cost of dining out, according to the Bureau of Labor Statistics.
Consumer prices, which increased by 7.9% in the 12 months through February, the largest increase since 1982, have become deeply politicized. Republicans blame Biden for rising prices, a message that is expected to heat up as the midterm elections near.
“Wages just can’t keep up with President Biden’s raging inflation, which is accelerating,” Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, said in a statement Friday. “Americans should brace for even higher prices ahead.”
Frustration with inflation, despite plentiful jobs, cuts across backgrounds, income levels and worldviews. Much of the hiring in the coming months “will be for lower-wage service workers,” said Robert Frick, an economist at Navy Federal Credit Union. “Unfortunately, those workers are hurt most by high inflation, especially for necessities like gas and food.”