“This has been an extraordinary job recovery, but this kind of growth can’t last forever, especially with unemployment so low,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “It’s getting harder and harder to find people to return to the job market, even if you pay higher wages.”
In April, the largest gains were concentrated in leisure and hospitality, manufacturing, and transportation and storage, as businesses struggled to keep up with constant consumer demand for goods and services.
The rapid recovery in the labor market has been a cornerstone of the recovery from the pandemic and a key political asset for the Biden administration, even as the workforce continued to be under pressure from a number of factors, including retirement and care. Employers posted a record 11.5 million job openings in March — nearly double the number of job seekers, 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 allowed the Federal Reserve to take aggressive action to curb inflation. The central bank raised interest rates by half a percentage point this week, the strongest increase since 2000, in hopes of cooling the economy without sinking into recession.
“We must do everything we can to restore stable prices as quickly and effectively as possible,” Fed Chair 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.”
However, there are signs of increasing uncertainty. The US economy contracted unexpectedly in early 2022, largely due to widening trade deficits and declining inventory purchases. Inflation remains at its highest point in 40 years. And stock prices — which skyrocketed to records during the pandemic — have fallen over the past week amid renewed fears of a possible recession this or next year.
“We’re at a strange phase in the cycle right now where it’s not entirely clear in which direction things are going,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “It’s clearly a skittish market environment and we’re starting to see some softening in several ways.”
Major companies, including Wells Fargo, have started laying off workers in recent weeks, and others like Amazon have said they are “overstaffed,” further obscuring employment prospects. In all, U.S. 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 outplacement agency Challenger, Gray & Christmas (Amazon founder Jeff Bezos owns The Washington Post). ).
Overall, the labor market is still short of 1.2 million pre-pandemic jobs, although several sectors have already made up for recent losses. For example, transportation and warehousing, and professional and business services each have about 700,000 more employees than in February 2020.
Amazon’s New Labor Question: What To Do With Too Many Employees?
Restaurants, bars and hotels are struggling to catch up after the widespread layoffs at the start of the pandemic. The leisure and hospitality sector has rapidly added new jobs, although it is still 1.4 million jobs, or 8.5 percent of the workforce, below pre-pandemic levels.
“The leisure and hospitality sector has led the recovery, but there has been some slowdown. The pay is not as high as in other industries, and people are reluctant to return to those jobs and stay there,” said Nela Richardson, chief economist at ADP. “There you see both the highest vacancies and the highest turnover in terms of terminations.”
Lou Salameh, who owns 10 sandwich shops in Jacksonville, Florida, says he can’t find enough employees to keep the business running smoothly.
He has started closing two hours early, at 6 p.m., and often has to close parts of his restaurants even earlier if he is short of staff. He has increased pay to about $12.50 an hour and has started offering weekly and monthly bonuses to his 150 staff, although he still has about 50 employees short.
“It’s extremely hard to find help and even harder to keep it down,” said Salameh, owner of Sheik Sandwiches and Subs. “The pay is unprecedented, we offer benefits and bonuses, but frankly it hasn’t taken a dent. It just feels impossible.”
Millions took early retirement during the pandemic. Many are now returning to work, new data shows.
But for many workers, the tight labor market remains favorable.
Leah Kush, who lives near Chicago, recently quit her 11-year job in the radio industry to take a position at a digital marketing company. It all happened very quickly: Kush applied in early April, interviewed a week later, and got a job offer less than 24 hours later.
“It was so easy that I thought, ‘Wow, this was meant to be,'” said the 41-year-old. “I feel alive again.”
Kush earns 33 percent more than at her last job, where she had not received a raise in eight years.
“There was no extra payment, but they kept piling things on my plate,” she said. “Finally in January I said, ‘I need to find something new.’ And I’m so glad I did.”