The U.S. labor market extended its streak of unprecedented growth, adding 431,000 jobs in March and sending the unemployment rate to a new pandemic low of 3.6 percent.
Economic uncertainty, including about rising interest rates and elevated gas prices, has led some economists to warn that job growth may soon slow to more modest levels. There are other warning signs, too: The number of Americans who have jobs or are actively looking for work is still lower than it was before the crisis. And although wages have risen 5.6 percent in the past year, they have not kept up with inflation of 7.9 percent.
“Things are zooming along, but there are also a lot of head winds that are likely to cause the labor market to plateau to a more moderate pace of growth,” said Guy Berger, principal economist at LinkedIn. “We’ve had a lot of forces propping up the labor market — a super supportive Fed, very generous fiscal policies — but those are either played out or actually going in reverse now. In that sense, it’s going to be hard to sustain the strength we’ve been seeing.”
For now, though, the picture remains exceedingly upbeat: The economy has added more than 400,000 jobs per month for 11 straight months. Both the unemployment rate and the number of people without jobs are almost down to pre-pandemic levels. And average hourly wages for private-sector workers continued to inch up, by 13 cents to $31.73 in March, the Labor Department said Friday.
“It’s been a remarkable recovery; we’ve never seen anything like this,” said Jane Oates, the president of the employment-focused nonprofit WorkingNation and a former Labor Department official. “Two years ago, every sector was at least disrupted if not completely shut down. But we’ve had such a quick recovery that things are almost back to normal.”
Industries including hospitality, retail and construction — which were among those most affected early in the pandemic when shutdowns forced millions of layoffs — have been rapidly rehiring in recent months. That trend continued into March, with restaurants, hotels and stores picking up a combined 161,000 jobs.
More than 300,000 women entered the workforce last month, helping lift the overall labor force participation rate — the percentage of Americans who are working or actively looking for work — to its highest level since February 2020.
“When we think about moving forward in 2022, getting more people back into the workforce is going to be key,” Labor Secretary Marty Walsh said in an interview. “We saw more women come back into the workforce this month, and we also saw an increase in hiring in the child-care economy. That’s important.”
In Anchorage, Locally Grown Restaurants — which is down to 280 employees from 330 before the pandemic — is rapidly hiring at its four sites. Executives there say they’ve raised wages, added hiring and referral bonuses, and begun recruiting at a high school that has a culinary program.
“The snow is melting here, it’s 45 degrees, and, like everyone else, we’re hustling to get hired up for the summer,” said Lana Ramos, the company’s marketing and communications manager. “We’re expecting a record tourism season but won’t have the labor force to support it all, especially with all of the restaurants pulling from the same pool of people.”
The labor market’s momentum has been accompanied by a surge in inflation, presenting a major headache for Federal Reserve officials and a White House struggling with war abroad and low ratings at home. The Fed in March raised interest rates by 0.25 percentage points, and Chair Jerome H. Powell has signaled that the central bank could pick up the pace of tightening this year in the hope of clawing back inflation.
“Inflation is likely to take longer to return to our price stability goal than previously expected,” Powell said at a March news conference. “We’ll deal with what comes, whether it’s better or worse.”
There are mounting concerns that interest rates could rise even higher, as coronavirus outbreaks in China and the war in Ukraine place further strain on global supply chains.
Meanwhile, higher prices on gas and food are eating into families’ budgets, faster than wages are rising. Food banks around the country are reporting higher demand, and some fear the student loan moratorium, which is set to expire May 1, will add new strain for millions of households.
The cloudy outlook could further complicate the labor market recovery, which has already been highly unequal. The unemployment rates for Black and Hispanic workers, for example, remain stubbornly above national levels, at 6.2 percent and 4.2 percent, respectively.
The overall trajectory of the labor market also depends on whether people who quit during the pandemic — either as part of early retirement or to care for family members — decide to return to work.
“Quite frankly, too many people have fallen out of the workforce or are underemployed, working in jobs below their skill levels,” said Oates of WorkingNation. “How do we dig down and get to women of color and Black men and older workers who are still being left out of a thriving economy?”
Adil Erradi recently landed a job at a lawn care company in Waukegan, Ill., after about two months of searching. Demand is so high, he said, that he’s already worked more than 120 hours in two weeks.
“There’s been a big hiring surge, but we’re still short-staffed,” the 23-year-old said. “Things are only going to ratchet up as the weather gets nicer.”
Restaurant owners as well as other hospitality industry employers report difficulty finding enough workers to satiate demand. The number of job openings nationwide continue to outnumber potential candidates, which means companies are having to get creative to accommodate both workers and customers, especially as the lull in coronavirus cases and higher temperatures lure more people back into hotels, stores and restaurants.
Hudson Cafe, a breakfast spot in downtown Detroit, has shortened its hours — opening later and closing earlier — to make up for a lack of workers. Owner Tom Teknos says he has raised wages by as much as 30 percent and is offering more flexible schedules, as well as bonuses and paid vacations for kitchen employees.
“It’s like putting a puzzle together to make this place run,” he said. “It’s very tough finding experienced people who know their way around a busy restaurant, especially at breakfast, when it’s very quick-paced.”
Construction companies have also been rapidly hiring new workers to keep up with heightened demand. The industry, which lost 1.1 million jobs in the first two months of the pandemic, added 19,000 positions in March, bringing employment to pre-pandemic levels.
In Centerton, Ark., Concrete Creations and Excavations is booked solid through the end of the year. But owner J.D. Huddleston says he’s struggling to find experienced workers. He has eight employees and has raised starting pay from about $15 an hour to $18.
“The struggle out here is hardcore,” he said. “We’ve been forced to do twice as much work with the same amount of guys. We’re working 60 hours a week, cranking on Saturdays and Sundays when needed, just to keep up.”
Andrew Van Dam contributed to this report.