“This has been an extraordinary jobs recovery, but this kind of growth can’t last forever, especially now that the unemployment level is as low as it is,” said Scott Anderson, the chief economist for Bank of the West in San Francisco. “It’s getting harder to find folks to come back into the labor market, even if you’re paying higher wages.”
In April, the biggest gains were concentrated in leisure and hospitality, manufacturing, and transportation and warehousing, as businesses tried to keep up with steady consumer demand for goods as well as services.
The job market’s rapid rebound has been a cornerstone of the pandemic recovery and a major political asset for the Biden administration, even though the workforce has remained depressed by a number of factors, including retirements and caretaking. Employers posted a record 11.5 million openings in March — nearly double the number of jobseekers, according to a Labor Department report released earlier this week.
That continued strength has empowered the Federal Reserve to take aggressive action to curb inflation. The central bank raised its benchmark rate this week by half a percentage point, the sharpest increase since 2000, in hopes of cooling the economy without sinking it into recession.
“We need to do everything we can to restore stable prices as quickly and effectively as we can,” Fed Chair Jerome H. Powell said Wednesday. “We think we have a good chance to do it without a significant increase in unemployment or a really sharp slowdown.”
Even so, there are signs of mounting uncertainty. The U.S. economy unexpectedly shrank in early 2022, largely because of widening trade gaps and falling inventory purchases. Inflation remains at 40-year highs. And stock market prices — which skyrocketed to records during the pandemic — have plunged in the past week, amid renewed fears of a possible recession this year or next.
“We’re in a weird stage in the cycle right now, where it isn’t completely clear what direction things are going in,” said Liz Ann Sonders, the chief investment strategist at Charles Schwab. “Obviously, it’s a skittish market environment, and we are starting to see some softening in different ways.”
Major companies, including Wells Fargo, have begun laying off workers in recent weeks, and others, including Amazon, have said they are overstaffed, further muddying the jobs outlook. (Amazon founder Jeff Bezos owns The Washington Post.) Overall, U.S. employers announced more than 24,000 job cuts in April, a 14 percent increase from the month before, according to figures released this week by the executive outplacement firm Challenger, Gray & Christmas.
The labor market is still short 1.2 million jobs from before the pandemic, although several sectors have made up for their recent losses. Transportation and warehousing, for example, and professional and business services each have about 700,000 more employees than they did in February 2020.
Restaurants, bars and hotels are struggling to catch up after widespread layoffs early in the pandemic. The leisure and hospitality industry has been rapidly adding jobs, although it is still down 1.4 million positions, or 8.5 percent of its labor force, from pre-pandemic levels.
“The leisure and hospitality sector has led the recovery, but there has been some slowdown. Pay is not as strong as in other industries, and people have been reluctant to come back to those jobs and stay in them,” said Nela Richardson, the chief economist at ADP Research Institute. “That’s where you see both the highest job openings and the highest turnover, in terms of quits.”
Lou Salameh, who owns 10 sandwich shops in Jacksonville, Fla., says he cannot find enough workers to keep business running smoothly.
He has started closing two hours early, at 6 p.m., and often has to shut down parts of his restaurants even earlier if he is short of employees. He has raised wages to about $12.50 an hour and begun offering weekly and monthly bonuses to his staff of 150 but is still short about 50 workers.
“It’s extremely hard to find help and even harder to keep help,” said Salameh, who owns Sheik Sandwiches and Subs. “Pay is at an all-time high. We’re offering benefits and bonuses, but it hasn’t made a dent, to be honest. It just feels impossible.”
Although average earnings have risen 5.5 percent in the past year, those gains have been wiped out by inflation, which is up 8.5 percent in the same period. That erosion of spending power has become worse in recent months, with hourly earnings dropping 2.7 percent in April when adjusted for inflation.
But for many workers, the tight labor market continues to prove beneficial.
Leah Kush, who lives near Chicago, recently left her 11-year job in the radio industry for a position at a digital marketing firm. It all happened very quickly: Kush applied in early April, interviewed a week later and received a job offer less than 24 hours after that.
“It was so easy that I was like, ‘Wow, this was meant to be,’ ” the 41-year-old said. “I feel alive again.”
Kush is making 33 percent more than at her last job, where she had not had a raise in eight years.
“There was no extra pay, but they kept piling stuff on my plate,” she said. “Finally, in January, I said, ‘I have to find something new.’ And I’m so glad that I did.”
