May 6, 2022 by Tim Hatton and Kyle Rudman
In April, the US added 428,000 jobs, and unemployment was little changed at 3.6%, but a drop in the labor force participation rate shows that the US is still struggling to find enough workers.
Employment is still 1.2 million below its pre-pandemic level, according to the Bureau of Labor Statistics’ monthly Employment Situation report, but fewer workers are reporting Covid is affecting their employment or job search, meaning the ongoing tightness in the labor market is lasting beyond the immediate impact of Covid-19.
“We still have such a huge deficit of workers, yet the impact of Covid is fading,” said Emsi Burning Glass Senior Economist Ron Hetrick. “There’s been a lot of speculation that rising inflation or declining savings would drive people back into the labor force, but instead of an increase we saw a decrease. Our labor shortages go deeper than just the pandemic.”
The number of jobs added was above expectations of about 400,000. Right after the report released this morning, Hetrick and Senior Economist Rucha Vankudre went live on LinkedIn with their initial takeaways and first reactions; watch their analysis here.
In April, the number of those teleworking because of the pandemic fell to 7.7% from 10% in March, those who said they were out of work because of Covid dropped to 1.7 million from 2.5 million, and 586,000 people were prevented from looking for work due to the pandemic, down from 874,000 in March. Each of those statistics have fallen sharply since the Omicron variant faded at the beginning of this year.
Yet the labor force participation rate is 62.2%, down 0.2% from last month but still 1.2% below its February 2020 level. So while this month’s report marks twelve straight months of strong jobs growth (adding over 400,000 jobs each month), the market is still months away from recovering to its pre-pandemic levels.
Much of the current tension in economic news comes from rising inflation; the Bureau of Labor Statistics reports prices have risen 8.5% over the past twelve months. Today’s Employment Situation shows that average wages have risen just 5.5% over the same period, and rose 10 cents from March to April. That’s bad news for workers who have seen their wages rise but buying power decrease because of the tight job market —particularly those in low-paying industries that have been most affected by high turnover.
“This is another sign that rising wages are pushing overall inflation higher–and yet workers are still losing ground,” said Rucha Vankudre, Senior Economist at Emsi Burning Glass. “Wages are increasing but not in real earnings for people.”
Those wage increases were relatively well-distributed across most industries; Mining and Logging saw the largest gain.
Accommodation and Food Services saw the largest jobs gain, adding 66,000, followed by Education and Health Services with 59,000 and Manufacturing with 55,000.
Overall, the biggest takeaway from today’s report is that the job market is growing steadily, but it is still far from meeting demand—especially as the latest BLS JOLTS report shows there are 11.5 million jobs open, nearly twice as many as the 5.9 million people unemployed.
“You look at an overall number like 430,000 jobs and you think, ‘Hey, that sounds really good,’ but it’s not really good.” Hetrick said on our broadcast. “We’re still dealing with record levels of job openings, so [something like] 400,000 new jobs when you have 11.5 million job openings just isn’t going to cut it.”
As employers compete for this limited pool of candidates, they will have no workers to spare, even as the direct impact of the pandemic fades.
For more discussion and takeaways from today’s report, catch up on our live broadcast here.