Impressive Jobs Gains in April but the Labor Force Has Declined
Continuing a long stretch of impressive growth, the U.S. economy added 428,000 jobs in April. An average of 550,000 jobs have been added each month since January 2021 with progress to recover all jobs lost to the pandemic this year.
In line with economists' expectations, the 428,000 jobs added in April were equal to the very strong job growth since the beginning of the year. Numbers for February and March were revised downward by a total of 39,000. As we get closer to pre-pandemic employment levels, continued monthly job gains at the recent pace are probably not sustainable given how tight the labor market is right now.
The unemployment rate held steady at 3.6% in April – just above the pre-pandemic low of 3.5%. So businesses are simply running out of talent to hire. In March, there were a record 11.5 million job openings but only 5.9 million unemployed workers available to fill those open roles, meaning there are nearly two open jobs for each unemployed worker.
While this month’s net new gob gains continued a long stretch of solid growth, the labor force actually shrunk for the first time since September 2021 – over 360,000 workers left the labor force in April. If we had continued the labor force gains of recent months, April could have been the month we reached pre-pandemic levels for labor force participation. Ultimately, to maintain the pace of job gains we’ve had in recent months – or even more modest gains – we need labor force participation to increase.
Despite Uncertainty, 2022 Hiring Should Remain Strong
April’s jobs report sheds some light on how U.S. businesses have responded to a range of challenges and uncertainty – the Russia-Ukraine War and record inflation, supply chain issues exacerbated by COVID lockdowns in China, among others. Record job openings and another month with robust net job gains indicate that the demand for labor remains strong.
These challenges have led many economists to project an economic slowdown in late-2022 or 2023. For now, the outlook for 2022 remains strong, and we will likely see hiring and job gains near record levels – LaborIQ® projects over 100 million total hires in 2022. And even if things do slow down, there will still be hiring and labor demand. During the Great Recession, from 2008 through 2010, there were just over 50 million hires per year. For context, before 2008 and after 2010, the average was around 61 million hires per year.
Recovery on the Horizon
The economy lost 22 million jobs in the early months of the pandemic, and around 1.2 million jobs remain unfilled. 2022 has started with an incredibly strong start to hiring in the U.S. – job gains for the first four months of the year have totaled over 2 million. The economy has been adding jobs at a rate nearly three times the pre-pandemic average of 190,000 jobs per month from 2015-2019.
The economy has added an average of 550,000 jobs each month since January 2021. At that pace, we will reach pre-pandemic employment levels by this summer – much more quickly than many expected just a year ago.
LaborIQ by ThinkWhy reports, forecasts and advises on employment conditions and the impact to jobs, industries and businesses across all U.S. cities.