When the economy slows, no one has told the job market.
The Labor Department reported Friday that employers added 275,000 jobs in February, another month that exceeded expectations even as the unemployment rate rose.
It was the third straight month of gains above 200,000 and the 38th straight month of growth – new evidence that America’s jobs engine still has plenty of steam four years after pandemic lockdowns began.
“We were expecting a slowdown in the labor market and a more significant easing of conditions, but we’re just not seeing that,” said Rubeela Farooqi, chief economist at High Frequency Economics.
Previously reported figures for December and January were revised downwards by a total of 167,000, reflecting higher statistical volatility in the winter months. This does not affect the picture of consistent, robust growth.
At the same time, the unemployment rate, based on a survey of households rather than businesses, rose to its highest level in two years at 3.9 percent. The increase, up from 3.7 percent in January, comes as people lose or leave their jobs and enter the workforce looking for work.
A broader measure of labor market slack, which includes part-time workers who would rather work full-time, has risen steadily and now stands at 7.3 percent.
One positive sign is that the labor force participation rate of people in their prime working years – ages 25 to 54 – rose to 83.5 percent, reaching its highest level since the early 2000s. The labor force participation rate of those over 55 remains well below pre-pandemic levels, perhaps partly because booming real estate and stock markets have allowed more people to retire.
The average hourly wage rose by 4.3 percent over the course of the year. Since last May, wages have risen faster than prices, although the pace of increases has slowed.
“We’ve seen gains in real wages recently and that has encouraged people to get back into the workforce and that’s a good development for workers,” said Kory Kantenga, senior economist at job search site LinkedIn. As wage growth slows, the likelihood of more people looking for work decreases, he said.
As recently as last fall, economists were forecasting much more modest employment growth, with new hiring concentrated in a few industries. Some industries hit by the pandemic have shed jobs, but expected downturns in sectors such as construction have failed to materialize.
The last few months have been marked by strong economic data, prompting analysts surveyed by the National Association for Business Economics to raise their gross domestic product forecasts and lower their expectations for unemployment trends. Inflation has eased, prompting the Federal Reserve to announce plans to cut interest rates sometime this year, which many see as a hedge in case the job market stalls.
Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas, helped tabulate the survey responses. He said sentiment had been boosted in part by easing concerns about government shutdowns and draconian budget cuts following several close calls since the fall. And it doesn’t hurt, he said, at a tamer but more sustainable pace.
“If we create 150,000 jobs every month this year, that would still be an incredible year, but it would still be a slowdown compared to last year,” Mr Jebaraj said. “And maybe we want both.”
Additionally, some of the cooling may have allowed more permanent growth. As the extreme labor shortage eased and the wave of layoffs subsided, employers who were unable to compete in bidding wars for workers found it easier to fill positions. And as people stay longer, productivity has improved, making it easier to pay more without raising prices.
Healthcare and government continued to drive wage gains in February, while construction continued its steady rise. The retail, catering, transportation and warehousing sectors, which had been flat to negative in recent months, recovered.
None of the major industries lost a significant number of jobs. However, high interest rates continue to slow the manufacturing sector, while credit intermediation continued its downward trend – this sector, which mainly includes commercial banking, has lost around 123,000 jobs since the start of 2021.
Few companies better embody the force behind recent job gains than home health services for the elderly, which provide 164,000 more jobs than before the pandemic – fully offsetting the decline in nursing and care facilities, which have become less popular since Covid-19 has made them pierced in 2020.
Elaine Flores is chief operating officer of Medical Home Care Professionals, an agency in Redding, California, that employs 102 clinical staff and caregivers. That’s an increase of about 20 percent since the start of 2020, although the net gain underestimates how many people it has had to hire as experienced providers left the profession.
“More and more nurses are retiring,” Ms. Flores said. “It’s probably the hardest discipline to recruit, and we’re competing with hospitals that have great benefit packages that we can’t offer with the margins of home health care.”
Increased immigration could help solve this problem in the coming years. The influx over the past two years has roughly doubled the number of jobs the economy could create per month in 2024 without putting upward pressure on inflation, to a range of 160,000 to 200,000, according to an analysis by the Brookings Institution .
That doesn’t mean the employment landscape looks rosy for everyone. Employee trust, as measured by business review website Glassdoor, has fallen steadily as layoffs at technology and media companies have made headlines. This is particularly true for white-collar jobs such as human resources and consulting, while jobs that require in-person work – such as healthcare, construction and manufacturing – are more optimistic.
“It’s a two-track job market,” said Aaron Terrazas, chief economist at Glassdoor, noting that job searches take longer for people with college degrees. “For professionals in high-risk industries, it is difficult for anyone who has been laid off to find a new job, whereas for frontline workers or service workers, it is still competitive.”
Those struggling to find steady employment are increasingly turning to gig jobs, Mr. Terrazas noted, which is not reflected in payroll data. That’s the case for 70-year-old Clifford Johnson, who retired from his job as an accountant in Orlando, Florida, three years ago and began collecting Social Security.
The outlook changed when Mr. Johnson separated from his husband and had to rent an apartment that costs $2,350 a month in Orlando’s hot real estate market. He didn’t get another job as an accountant and a retail position didn’t work out. He’s exhausted his limited savings and is now driving for Uber Eats full time – even on weekends – to stay afloat.
“I just do what I can do to make money every day,” Mr. Johnson said. He hopes to get a few more jobs as a contract accountant because driving so much is physically demanding. “When you’re 25 or just finishing college, it’s very different than when you’re 70 and still trying to make a living.”
The path forward for the labor market, which few have been able to accurately predict, remains unclear. To date, every perceived threat – including wars, significant interest rate hikes and bank failures – has been met with steadfastness.
Thomas Simons, senior economist at investment banking firm Jefferies, expects the economy to end the year looking weaker than it does now, although there are no obvious potholes.
“It’s been more than 30 years since we’ve had a business cycle like this, where we’re waiting for enough resistance to build between different sectors to bring the overall number down,” Simons said. “I still believe it is unlikely that this will continue indefinitely, even without a discreet catalyst.”
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2024-03-08 18:57:02
www.nytimes.com
