March Employment Growth Closes in on Pre-Pandemic Levels

According to expectations, March saw an increase of 431,000 jobs. Revisions of the previous two months data added 95,000 new jobs to January and Feb growth, bringing the monthly average to 562,000. The total employment has fallen by 1.6million from pre-pandemic levels. Strong job growth led to unemployment falling to 3.6%, just 0.1 percent below its prerecession low.

Pre-Pandemic Employment Levels Reached

March’s rise in employment left total employment at just 1.6 million jobs below its prepandemic level. This is less than three months at its current rate of growth. Only 870,000 jobs have been lost in the private sector since February 2020.

Chart showing labor force participation is approaching pre-pandemic levels

Evidence of a moderate slowing in wage growth

There was evidence that wage growth had slowed slightly, which should help to reduce inflation fears. The average hourly wage was up 5.6 percent year-over-year, but increased at a 5.1 percent annual rate when comparing the last three months (January–March) with the prior three months (October–December).

Similar story for the nonsupervisory and production workers. They saw their pay rise by 6.7% year-over-year but only 6.0 percent annually when comparing the three previous months. After soaring, the pay for production workers in leisure/hospitality, which had been increasing rapidly, slowed to an 14.9 percent increase year-over-year, to an 8.3 percentage annual rate when comparing three months ago with the previous three months.

Average Workweek Falles A Little in March

In March, the average workweek length fell by 0.1 hours. Despite strong job growth, this result left the index for aggregate hours unchanged. This is consistent in a labor shortage that is becoming less severe. Employers are finding it easier and more cost-effective to hire workers. This means they can put in fewer hours.

Sectors with problems raising wages continue being hard hit

The pre-pandemic employment levels are still below the sectors that have had trouble raising their pay. Nursing home employment fell by 2,500, which is a drop of 241,000 (15.2%) from pre-pandemic levels. While child care jobs increased by 6,000 in March and are still at an 117,000 (11.1%) level, they are still below pre-recession levels.

While local governments added 20,000 new jobs in March to their workforce, the unemployment rate is still at 612,000 (4.2%) below pre-recession levels. Nearly half of the job loss from pre-pandemic levels is now in the public sector.

Voluntary Quits Cause a Sharp Drop in Unemployment

Another indicator that the labor market is cooling is the drop in unemployment due to voluntary quitting. The share fell sharply, from 15.1 percent in Feb to 13.0 percent March. These data are not reliable, but the drop would indicate a weakening labor market.

Self-employment continues at levels far higher than pre-pandemic.

In March, 618,000 people reported being self-employed (both unincorporated and incorporated). This was higher than the average for 2019. Self-employment remains high despite the tightening labor market. This suggests that self-employment can be a choice and not an act desperation. If you include the rise of self-employment, private sector jobs will be just 250,000 lower than their pre-pandemic level.

Restaurant Industry Leads to Job Gainers

March saw a 61,300 increase in restaurant jobs but employment remained at 820,000 (6.6%) below pre-pandemic levels. This is remarkable as real restaurant sales are at or above pre-pandemic levels. This indicates large productivity gains. Other job-creators include manufacturing, which added 38,000 jobs, and retail, which created 49,000 new jobs. Construction added 19,000. Retail and construction employment is now higher than it was before the pandemic. Manufacturing employment is still below 1.0 percent.

The motion picture sector added 8,400 jobs in march, bringing its gains to 93.100 for the year. This is almost a 30 percent increase. This sector had been the hardest hit by the pandemic. The unemployment rate is now less than 3.0% compared to February 2020.

Black unemployment rate drops sharply

The unemployment rate for Blacks dropped 0.4 percentage points to 6.2%, which is 0.8 percentage point lower than the pre-recession low. It is almost twice the 3.2 percent rate of unemployment for whites. Hispanics saw their unemployment rate drop from 4.4 percent down to 4.2 percent.

The unemployment rate among Asian Americans was 2.8 percent, which is slightly lower than the rate for whites. This was the usual pattern before the pandemic.

Prime Age Workers Seek Employment at a Higher Rate by 0.5 Percentage.

The employment rate of prime-age workers (aged 25 to 54) increased 0.5 percentage point in March to 80.0%. This level was not attained after the Great Recession, and it is only 0.5 percentage points lower than the pre-pandemic peak.

COVID-19 still affects nearly 900,000.

In March, 874,000 people said they were out of work because of COVID-19. These are people who are either sick or caring for someone who is. Although this is less than the 1.2 million reported in February, it still represents more that 0.5 percent of the workforce.

Another solid report

The March report indicated that the labor market continues its improvement, with limited evidence that some labor shortages are being addressed. According to the March report, the average workweek has fallen. This suggests that employers are more able to hire the workers they need. Workers may be less optimistic about their future job prospects due to the decline in unemployment caused by quits. Inflationary pressures should be reduced because of slower wage growth in sectors that have seen the fastest run-ups.