“This has been an extraordinary jobs recovery, but this kind of growth can’t last forever, especially now that unemployment is so low,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “It is getting harder and harder to find people to return to the job market, even if they are paying higher wages.”
In April, the biggest gains were concentrated in leisure and hospitality, manufacturing, and transportation and warehousing, as companies tried to keep up with steady consumer demand for goods and services.
The rapid rebound in the labor market has been a cornerstone of the recovery from the pandemic and a political asset for the Biden administration, despite the fact that the workforce has been kept depressed by a number of factors, including retirements and care . Employers posted a record 11.5 million job openings in March, nearly double the number of people looking for work, according to a Labor Department report released earlier this week.
Job openings hit new records as 4.5 million Americans quit or changed jobs in March, reflecting the strength of the job market
That continued strength has empowered the Federal Reserve to take aggressive action to curb inflation. The central bank raised its benchmark rate this week by half a percentage point, the biggest increase since 2000, in hopes of cooling the economy without plunging it into recession.
“We need to do everything we can to restore stable prices as quickly and effectively as possible,” Fed Chairman Jerome H. Powell said on Wednesday. “We think we have a good chance of doing it without a significant increase in unemployment or a really sharp slowdown.”
Still, there are signs of growing uncertainty. The US economy unexpectedly contracted in early 2022, largely due to widening trade gaps and falling inventory purchases. Inflation remains at 40-year highs. And stock market prices, which soared to record highs during the pandemic, plunged last week amid renewed fears of a possible recession this year or next.
“We’re in a weird stage of the cycle right now, where it’s not entirely clear which way things are going,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “Obviously it’s a skittish market environment and we’re starting to see some softening in a few different ways.”
Major companies, including Wells Fargo, have begun laying off workers in recent weeks, and others, including Amazon, have said they are overstaffed, further clouding job prospects. (Amazon founder Jeff Bezos owns The Washington Post.) Overall, US employers announced more than 24,000 job cuts in April, a 14 percent increase from the previous month, according to figures released this week by executive placement firm Challenger, Gray & Christmas.
The labor force participation rate, the percentage of working-age Americans who have or are looking for a job, fell to 62.2 percent in April, wiping out two months of steady gains.
“We don’t want the participation rate to go down,” Labor Secretary Marty Walsh said in an interview. “Over time we are going to see a transition to regular market conditions, but we have a great opportunity in our country right now to continue adding jobs.”
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The labor market is still 1.2 million jobs short before the pandemic, although various sectors have made up for recent losses. Transportation and warehousing, for example, and professional and business services have about 700,000 more employees than in February 2020.
Restaurants, bars and hotels are struggling to catch up after widespread layoffs early in the pandemic. The leisure and hospitality industry has been adding jobs rapidly, though it is still down 1.4 million positions, or 8.5 percent of its workforce, from pre-pandemic levels.
“The leisure and hospitality sector has led the recovery, but there has been some slowdown. The pay is not as good as in other industries, and people have been reluctant to go back to those jobs and stay in them,” said Nela Richardson, chief economist at the ADP Research Institute. “That’s where you see both the highest job openings and the highest turnover, in terms of quits.”
Lou Salameh, owner of 10 sandwich shops in Jacksonville, Florida, said he can’t find enough workers to keep the business running smoothly.
It has started closing two hours earlier, at 6:00 pm, and often has to close parts of its restaurants even earlier if it lacks employees. It has raised wages to about $12.50 an hour and has started offering weekly and monthly bonuses to its 150-strong workforce, but it’s still about 50 workers short.
“It is extremely difficult to find help and even more difficult to maintain it,” said Salameh, owner of Sheik Sandwiches and Subs. “Pay is at an all time high. We are offering benefits and bonuses, but to be honest, it hasn’t made a dent. It just feels impossible.”
Millions retired early during the pandemic. Many are now returning to work, new data shows.
Although average earnings have risen 5.5 percent in the past year, those gains have been offset by inflation, which rose 8.5 percent in the same period. This erosion of purchasing power has worsened in recent months.
But for many workers, the tight labor market is still beneficial.
Leah Kush, who lives near Chicago, recently left her job of 11 years in the radio industry to take a position with a digital marketing company. It all happened quickly: Kush applied for her in early April, she was interviewed a week later, and received a job offer less than 24 hours after that.
“It was so easy that I was like, ‘Wow, this was meant to be,’” the 41-year-old said. “I feel alive again.”
Kush earns 33 percent more than at her last job, where she hadn’t had a raise in eight years.
“There was no extra payment, but they kept piling stuff on my plate,” he said. “Finally, in January, I said, ‘I have to find something new.’ And I’m so glad I did.”