After creating an average of 200,000 new jobs each month for 100 months, the U.S. economy appeared to create a mere 20,000 in February 2019. That paltry number contributed to fears that the economy was facing a growing risk of recession.
Against that backdrop, observers eagerly anticipated the release of the March jobs report on Friday last week. The report’s three key metrics—job growth of 196,000, an unemployment rate of 3.8%, and wage growth of 3.2%—calmed fears substantially and buoyed stocks. Investors seemed relieved that the economy continues to add jobs at a healthy pace, that unemployment remains low, and that wage growth—which has now topped 3% for six months—remains robust enough to deliver meaningful increases to household incomes, but not so rapid as to stoke fears of inflation.
The key takeaway from the jobs report is how remarkably steady and enduring the labor market expansion has been and continues to be. Various data series in the jobs report bounce up and down from month to month, and these movements are often amplified in newspaper headlines. But they have been no more than statistical noise—fluctuations around remarkably persistent positive trends. Three of those trends are highlighted here.
Widespread Employment Growth
The first trend to note is that employment rates have steadily increased since 2011 among both young and old. They have now returned to their pre-recession levels among younger workers and surpassed pre-recession levels among older workers.
In just the past year, the number of Americans aged 55 and over outside the labor force has increased by 1.5% or 860,000, while the number of employees aged 55 and over has increased more than twice as quickly, by 3.1% or 1.121 million.
Job gains have not only benefited the most educated workers. On the contrary, the increase in employment rates has been strongest for the least educated workers—those with less than a High School diploma.
Steady Wage Growth
Rising employment and tightening labor markets are boosting wages. Average weekly growth in earnings has now exceeded 3% for more than a year. While private sector wage growth measured 3.2% in March for all employees, it was slightly higher at 3.4% for non-managers.
Strong Service Sector Growth
Where has most job growth taken place? Predominantly in full-time work, and in the service sector, with professional and business services and health care continuing to lead. Over the past year, over 534k new jobs have been created in professional and business services, 484k in health care and social assistance, 435k in leisure and hospitality, 246k in construction, 225k in trade, transportation, and utilities, and 209k in manufacturing.
Source: U.S. Bureau of Labor Statistics