The stable labor market continued to develop in March with the unemployment rate at 3.8%, marking the 26th consecutive month with an unemployment rate below 4%.
The economy added 303,00 jobs, according to the monthly report released by the Bureau of Labor Statistics on Friday. Economists, researchers and policy experts say a strong but no longer hot labor market should be encouraging news for the Fed as it decides whether to cut rates after a long campaign to fight inflation.
Aaron Sogerner, an economist and senior researcher at the WE Upjohn Institute for Employment Research, a nonprofit research organization based in Kalamazoo, Mich., said the labor market is “strong and healthy.”
“Remarkably, the economy has added over 300,000 jobs at this point, and job growth appears to be accelerating,” Sogerner said.
Which sectors are adding jobs?
Health care and government continued to add jobs in March, with the two sectors adding above their average monthly gains, at 72,000 and 71,000.
Elise Gould, senior economist at the Economic Policy Institute, an economic policy think tank based in Washington, said government is a sector that economists will look to see more job growth in education. She added that public sector workers can drive employment growth in the private sector as well.
For the first time, hospitality and leisure returned to pre-pandemic levels after adding 49,000 jobs. Researchers and economists took this development as a good sign for the economy and for workers. Gould said this was a “big milestone”, but also noted that many sectors have already reached this level and beyond.
Sojourner said it may be a good sign that it took this long for leisure and hospitality to return to this level of occupancy.
“The fact that it didn’t recover immediately is in some ways good news because many people found better opportunities outside the sector and employers had to raise wages and the quality of the jobs they offered to attract people back into the sector.” he said.
Construction also added about twice the average monthly number of jobs it added over the past year, at 39,000 jobs.
Skanda Amarnath, executive director of Employ America, a Washington, D.C.-based policy research and advocacy group, said it’s hard to pinpoint exactly what’s driving these job gains. The CHIPS and Science Act, the Deflation Act, and the bipartisan infrastructure deal boosted construction employment. Housing construction is “relatively stable,” he said. But those jobs could also be tied to an increase in construction hiring in the spring months.
What do experts think about the rising black unemployment rate?
Jobs data over the past four months showed an increase in the black unemployment rate from 5.2 percent in December to 6.4 percent in March. The unemployment rate among black women is 5.6 percent, compared with 4.4 percent last month and 4.1 percent a year ago. Black men had an unemployment rate of 6.2 percent, down from 6.1 percent in February and 5.1 percent a year ago.
Gould said the rise in the unemployment rate among black people worries her because it has been happening for several months, but it is not yet alarming because of the volatility of the data collected.
“I think it’s something we have to watch,” she said.
Sojourner agreed that while more data is needed, it’s important to monitor the unemployment rate for black Americans, especially if it’s an indication that blacks are having a hard time finding work, rather than a sign of more people entering the workforce of labor and looking for work.
He added that the effects of the recession tend to hit blacks before other groups.
“It’s very concerning because you’ll often see that black Americans are in the lead … The recessionary stuff hits them first,” he said.
What does prime-age employment tell us?
The prime-age employment-to-population ratio, which measures the share of the working-age population, or those aged 25 to 54, who are employed was also quite high this month at 80.7%. In April 2000, it reached an all-time high of 81.9%.
Amarnath said this is encouraging news.
“We are currently working at levels that are particularly high. Ideally, they can continue to rise during the year, but these are levels that we haven’t seen before the last 12 months, since I believe more than 20 years ago … he said. “You think about [prime age employment] as the best way to estimate how many people are employed, adjusting for population aging, adjusting for changes in participation.”
Are we seeing healthy wage growth?
Wages continue to outpace inflation with an increase of 4.1% over the past year. In March, they rose 12 cents, or 0.3%. The wage growth numbers as well as the number of jobs added show a stable labor market, but not one that threatens the Federal Reserve’s efforts to reduce inflation, Gould said.
“When I look at these wage growth numbers, I think it’s pretty clear that it continues to normalize broadly in line with the Fed’s targets as the inflation rate continues to decline. I think we’re in an economy that’s getting to where we wanted it to be, and I think the Fed is looking for that as well. We’re seeing strong job growth, and that’s promising. More and more people are returning to the workforce looking for opportunities,” she said.
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