Quotes may be attributed to Julia Pollak, Chief Economist at ZipRecruiter, a leading online employment marketplace
The U.S. economy added 678k jobs in February as Omicron faded, soundly beating expectations. Totals for the prior two months were revised upwards by 92k. Job gains also broadened across the economy.
The number of workers out sick due to Covid dropped from 3.6 million to 1.6 million, 304k workers returned to the labor force, and the prime-age labor force participation rate rose from 82.0% to 82.2%. Paired with an uptick in weekly working hours, these numbers point to a substantial increase in labor market activity in February.
Job Growth Should Remain Strong in the Coming Months
The jobs report suggests we could see further growth in the months ahead. 4.2 million people reported that they were not able to work in February because their employer closed or lost business due to the pandemic. As Covid cases fall further, we could see more businesses come back online, raising employment and output.
The report also showed that the number of workers employed part-time for economic reasons because they couldn’t find full-time work rose by 418k. Many of these workers should be able to find full-time work in the months ahead.
The number of workers not in the labor force who want a job now is 5.3 million, up from 5 million before the pandemic. Hundreds of thousands of these workers could also return soon as business picks up.
Women’s Employment Raises Concerns
Worryingly, the prime-age labor force participation rate for women dropped to 75.8% from 76.0%, even as it increased among men to 88.8% from 88.2%. The departure of women could reflect childcare challenges that have dragged on throughout the pandemic. Employment in child daycare services ticked upwards from 922.8k to 930.7k, but is still down 11.7% from pre-Covid levels. Employment in public and private education also slowly improved, but is still down by 392k.
Overall, there are still 590k fewer people in the labor force than before the pandemic, and all of the missing workers are women. There are 1.2 million fewer women and 600k more men.
Below-Expectation Wage Growth Likely Reflects Composition Effects
Average hourly earnings hardly changed, despite tight labor market conditions and the fact that workers are increasingly requesting that their compensation keep pace with inflation. The average is likely being dragged down by the reentry of low-wage workers into the workforce. Other data sources point to accelerating wage growth.
Certain industries are seeing more rapid wage growth than others. The leisure and hospitality sector is still leading the way, with average wages growing 11.2% over the year. Annual average wage growth also surged in transportation and warehousing to 7.7%. These are the only two industries where average wage growth outpaces inflation.
Office Reopenings Fueled Recovery in Downtown Service Businesses
As Omicron waned, many workers came back to the office. 13.0% of employees teleworked because of the coronavirus pandemic, down from 15.4 percent in the prior month. As more workers return to office in March, we could see job gains in the businesses that serve office workers accelerate.
Already, employment in leisure and hospitality grew 179k in February. The sector still has tremendous room for recovery, with employment still down by 1.5 million, or 9.0%, since the pandemic.
