American companies continued in April to multiply hirings, a solidity of the job market welcomed by Joe Biden who sees in it the fruits of his economic policy.
Despite higher costs due to a chronic labor shortage and record inflation, employers have added 428,000 new jobs to the world’s largest economy, particularly in service sectors, manufacturing and transport, those that have been hardest hit by the pandemic. This is more than the 395,000 jobs that were expected by a consensus of analysts but as much as in March after a slight downward revision.
95% of jobs destroyed by the pandemic have been recreated
In two years, the American economy has recreated nearly 95% of the 22 million jobs destroyed when the Covid-19 pandemic paralyzed economic activity and plunged the United States into a deep recession in the spring of 2020.
Although there was a catch-up effect after immediate and massive destruction as well as record unemployment of 14.7% in April 2020, the Democratic president has taken credit for this recovery. “Our policy measures have produced the strongest job creations of modern times,” commented Joe Biden in a press release. “The fall in unemployment (is) the fastest ever recorded since the start of a presidential term,” he added.
Unemployment rate stable
The unemployment rate remained at 3.6%, close to that of February 2020, that is to say just before the spread of the pandemic. At 3.5%, it was then at its lowest level since 1969. In April, the number of unemployed remained “essentially unchanged at 5.9 million”, the ministry said in its press release.
The unemployment rate for black or African-American people, on the other hand, fell last month, to 5.9% against 6.2% in March, while remaining much higher than that of whites (3.2%, unchanged) and to that of Hispanics (4.1%, down 0.1 point).
Both the rate of participation in the labor market, at 62.2%, and the employment-population ratio, at 60.0%, have on the other hand “little varied”, estimates the ministry. They each remain 1.2 percentage points below their February 2020 level.
For the past year, companies have been facing shortages of employees after many retirements during the pandemic, and massive resignations each month to find better working conditions. Gregory Daco, EY Parthenon chief economist, notes that the participation rate fell 0.2 percentage points last month, “to its lowest in 4 months”. Labor supply is thus moving “in the wrong direction,” he says.
“While a lower unemployment rate would be great, it may not be desirable,” he added in a note. “The paradox is that it would be healthier for the labor market if the unemployment rate stabilized at current levels and labor force participation increased toward pre-pandemic levels.” It is counting on the creation of more than 4 million jobs this year, with an unemployment rate close to 3.3% by the end of the year.
More than 11 million jobs available
According to another survey by the Ministry of Labor published this week, there were more than 11 million jobs available in the country in March, a record. “And, the leisure and hospitality sector still has 1.4 million fewer jobs than before the crisis,” commented Diane Swonk, economist at Grant Tronton. This delta represents more than the 1.2 million jobs missing from the February 2020 peak, she points out.
For the public education sector, more than 300,000 jobs are still missing. “Burnout and lagging salary gains in education are not helping” hiring, she explained.
Wages on the rise, without catching up with inflation
In an attempt to attract candidates, private sector companies have improved salary conditions, increasing hiring bonuses and now offering more generous social benefits. This fueled higher wages, which rose 0.3% in April from March. Over one year, they advanced by 5.5%, a leap that was insufficient, however, to offset record inflation.
“Fighting inflation is a top priority for me,” repeated Joe Biden, blaming the pandemic and Russia’s invasion of Ukraine as responsible for the worsening inflation. Inflation reached 8.5% over one year in March, according to the CPI index, the highest for forty years.