April jobs report: A gain of 428,000 shows buoyant labor market

The US economic rebound from the devastation of the pandemic continued in April with another month of solid job growth.

Employers added 428,000 jobsmatching the previous month, the Labor Department reported Friday, with broad-based growth across all major industries.

The unemployment rate remained at 3.6%, just slightly above its pre-pandemic level, when it was the lowest in half a century.

The challenge of a highly competitive labor market for employers — a shortage of available workers — also persisted. In fact, the report showed a drop of 363,000 in the labor force.

The economy has recovered nearly 95% of the 22 million jobs lost at the height of coronavirus-related lockdowns two years ago. But labor supply hasn’t kept up with a record wave of job creation as businesses expand to match consumers’ continued desire to buy a variety of goods and services. There are now 1.9 job vacancies for every unemployed person.

The rush to hire has pushed up wages, and employers are largely passing on that spending, helping to fuel the inflation that Americans have cited as their top economic concern. On that front, Friday’s report showed a slowdown in the acceleration of average hourly earnings, which rose 0.3% the previous month, after a gain of 0.5% in March.

President Biden pointed to the latest data as evidence of “the strongest job-creating economy in modern times,” a message the White House is increasingly amplifying ahead of the congressional elections.

But a record share of Americans now see inflation as the biggest financial problem facing their households, according to a Gallup poll in April. The survey found that 46% of Americans rated their personal finances positively, up from 57% last year, when most households recently received rounds of direct federal aid.

After the Labor Department’s report on Friday, Ronna McDaniel, the chairwoman of the Republican National Committee, focused on inflation rather than jobs. “Families can’t afford food and groceries, wages can’t keep up with inflation, and Biden’s agenda will only make things worse,” she said. in a press release.

The April survey showed that average hourly wages were 5.5% higher than a year earlier, but with inflation rising to 6.6% — its highest rate in 40 years — workers find themselves with reduced purchasing power.

Rapid price increases, which began last spring as household and business demand clashed with a chaotic reorganization of the supply of goods and labor, have persisted longer than the Reserve forecast. federal government, prolonged in part by price pressures resulting from the war in Eastern Europe and the lockdowns in China.

Consequently, the Federal Reserve announced this week that it would raise its benchmark interest rate by half a percentage point – the biggest increase since 2000 – and signaled that further increases are to come. The effort aims to slow demand and business expansion by making money more expensive to borrow, with the aim that this could, in turn, slow hiring and reduce the ability of job seekers to find themselves. compete for higher salaries.

If borrowing costs reach what officials call restrictive levels, a recession and reversal in job gains could ensue. But Fed Chairman Jerome H. Powell expressed confidence that the economy can be brought back into balance, a view some economists echoed.

“Job creation will eventually settle in at a slower pace as businesses feel the effects of soaring inflation and tighter financial conditions, but gains will remain healthy,” said economist Oren Klachkin. Chief American at Oxford Economics. He predicted that the economy, which created two million jobs in 2022, would add another two million by the end of the year.

In any case, the economic effects of the Fed’s intervention will not be felt overnight, and there are reasons to think that the process could take longer than in the past. “At this time, we don’t see any significant signs that consumers or businesses are pulling back,” Klachkin said. “Sentiment may be weak there, but that doesn’t always indicate how people are spending their money. In other words, people feel one way, but act another.

A key driver of business expansion and employment growth has been the sustainability of household finances, supported by relief spending over the past two years. The savings accumulated during the pandemic, although geared towards the wealthy, remain in the trillions. And according to anonymized data collected by Bank of America, which tracks the spending of its 67 million customers, households with annual incomes below $50,000 have about twice as much savings as before the pandemic.

Mary and Chris Ginder, a married couple in St. Charles, Illinois, who run an artisanal hot sauce business, have seen the benefits of continued willingness to spend.

They were happy with their growing operation, Spice of Life, in February 2020. Then came a problem: “About 45% of our business was going to local festivals and farmers markets, meeting people and to sell directly to customers,” Ms. Ginder said. This business model has been entirely undermined by virus fears and state health restrictions.

To keep the business alive, the couple opted for free shipping and aggressively increased their e-commerce presence by revamping their website, doing email marketing and running social media campaigns. social with local partners. When gas prices jumped, they canceled the free delivery service.

“We tried to see it as an opportunity, you know? Not everything is negative. said Mr. Ginder, referring to the ups and downs of the past two years. “For anything that looks like a hiccup, there’s something positive that can come out of it, if you’re creative enough.”

With weekend markets and festivals resuming, the couple have enough cash to expand beyond their eight to 10 employees. So far, they’ve had no trouble hiring. Part-time kitchen workers start at $12 an hour, and pay for full-time workers varies widely depending on negotiations.

“We will find a salary that makes sense for them and for us,” Ms Ginder said. “Even if that means sort of stretching our pocket a bit, because we see the bigger picture.”

Other employers have found it harder to manage the current environment. Jerry Bone, the owner of West Side Electric Service in Nashville, has eight electricians on his staff. Still, he says he could use more.

“It’s hard to get young people to train,” he complained, before claiming there were times he trained new recruits to see how “a guy can emulate you – quickly start his own business – “then call your customers. Frustrated, he characterized the trend as part of what is seen as an eager expectation among a younger generation of traders ‘to start at the top of the pay scale’ in a way that erodes teamwork.

With business orders booming in the region, he said, veteran electricians like himself, “who can do it – they’re in demand.” He would prefer to hire more and focus on management and training, he added, but understaffing keeps him in the field until the evening six days a week. “I’m 68, I still work with my tools, I climb in attics,” he said.

All of this comes, Mr. Bone says, on top of skyrocketing price increases for electrical components – “coils, circuit boards, even some circuit breakers” – which are also often in short supply. “I mean, a circuit breaker that was $28 is now $108.” As a result, he raised prices. “Our customers don’t like it at all,” he said.

With a growing number of economists believing the country is at or near full employment, in which virtually everyone who is able and willing to work does, consultancy McKinsey concluded in a recent report that the “untapped” pool of labor – those not in the labor market, but who could return with the right offer and under the right conditions, such as relief from care obligations – could reach 23 millions of people.

Even if the labor force fully returned to pre-pandemic levels, there wouldn’t be enough workers to meet employers’ needs, said Michelle Meyer, chief U.S. economist for Mastercard.

“It’s not about getting the supply to where it was before the pandemic,” she said. “It’s about getting supply to meet this very high level of demand.”

Ben Casselman, Zolan Kanno-Youngs and Jeanna Smialek contributed report.