The four big stories in last week’s jobs report are continued blockbuster job growth, the accelerating return to work, a rapid return to the office, and soaring wage growth for non-managerial employees.
Sustained Blockbuster Job Growth
The economy created 431k jobs in March and the unemployment rate fell to just 3.6%, as labor market conditions improved between mid-February and mid-March. That marks 11 straight months of job growth above 400k per month. Already-high figures for January and February were revised upwards by a combined 95k. That makes February’s gain of 750k the largest since 2020. If the current pace of job growth is sustained, we’ll be back to pre-pandemic employment levels in just 3-4 months.
Robust job growth reflects improving pandemic conditions and increased mobility. Covid cases fell 80%, air travel rose 30%, and restaurant dining soared back to 2019 levels from a 20-point deficit. The increase in customers streaming through business doors drove up demand for labor.
A Healthy Return to the Labor Force
The labor force expanded by 418k people as the Great Return to the labor force picked up steam. The labor force has swelled by almost 3 million in just the past 6 months. Among prime-age employees—the core of the labor force which excludes retirees and students—participation has almost fully recovered. The labor force overall is only down 0.1%, and the prime-age labor force has actually fully recovered and is now up 0.4% compared with pre-pandemic levels. Easing labor supply constraints bodes well for job growth in the coming months.
The increase in the number of women in the workforce is particularly encouraging. Women’s careers have been most severely disrupted during the pandemic, both due to the industry composition of job losses and due to the pandemic’s effects on childcare and schooling. The large 324k-increase in female labor force participation suggests that women may finally be able to resume their careers and get back on the promotion ladder.
The number of people who reported that they had been unable to work due to pandemic-related slowdowns or closures fell sharply from 4.2 million to 2.5 million as Covid cases plummeted. 874k people said they were prevented from looking for work due to the pandemic, down from 1.2 million in February. With 11.3 million job openings, these reentering job seekers are likely to find success in the coming months, further increasing the ranks of employed workers. The number of workers who were out sick also fell back down to more typical levels.
An Accelerating Return to Offices
4.6 million workers returned to their offices in March after multiple Covid waves delayed prior RTO dates. Only 10.0% percent of employees teleworked temporarily due to the pandemic, down from 13.0% in February and 15.4% in January.
The return to the office increased downtown foot traffic and business travel, boosting demand for workers in the leisure and hospitality sector. That sector added 112k jobs in March, and could add yet more in the coming months. It is still 1.5 million jobs away from pre-pandemic employment levels.
A Record Quarter of Wage Growth for Rank-And-File Employees
Average annual wage growth for nonsupervisory employees held steady at 6.7% overall. Wage growth rates achieved in the past quarter have been the fastest since 1982. Wage growth for non-managers was up in the double digits in leisure and hospitality (14.6%) and in transportation and warehousing (11.0%), which saw the fastest wage growth for non-managers on record.
The Lagging Public Sector Recovery
The private sector has now recovered 96% of the jobs lost at the start of the pandemic, whereas the public sector has only recovered 51%. Almost all of the public sector jobs lost are in K-12 education. It is imperative that our schools fully recover quickly to avoid long-term effects on human capital and opportunity. The public sector has barely added any jobs in recent months.