U.S. Employers Added 428K Jobs in April

Unprecedented demand for workers helped power another month of payroll gains as U.S. employers added 428,000 new jobs in April, according to the latest employment report from the Bureau of Labor Statistics. This marks the 12th straight month of job growth above 400,000.

The unemployment rate held at 3.6 percent, close to what is considered full employment and just above the pre-pandemic rate. Wages were up 5.5 percent year-over-year, below the pace of inflation but still sparking some concern about a possible inflationary wage spiral.

"Overall, the job market continues to log steady gains as employer demand remains sky high and workers flow back into jobs," said Daniel Zhao, Glassdoor senior economist. "Despite some indicators of cooling in April like the declining labor force participation rate and slowing wage growth, the job market is still nearing key recovery milestones as the unemployment rate reaches pre-pandemic levels and payroll employment is on track for a full recovery this summer."

The U.S. economy is now only 1.2 million jobs short of pre-pandemic employment levels. So far in 2022, employers have averaged 518,500 new jobs monthly. In fact, recent government data shows the gap between job openings and available workers widening to a record 5.6 million in March, or about two jobs for every unemployed worker.

"Employment is growing, but openings and quits are at record levels because labor force participation is weakening," said Ron Hetrick, senior economist at Emsi Burning Glass in Moscow, Idaho. "Fewer people are reporting that COVID left them out of work or unable to look for work, yet we're still not back to pre-pandemic levels in terms of jobs or labor force participation. There's been a lot of speculation that rising inflation or declining savings would drive people back into the labor force, but instead of an increase we saw a decrease."

The labor force participation rate fell 0.2 percentage points for the month to 62.2 percent, the first monthly decline since March 2021, and the labor force contracted by 363,000 workers.

"Even as economic growth continues, labor markets remain tight with demand for employees continuing to exceed the supply of individuals seeking work," said Richard Wahlquist, CEO of the American Staffing Association, based in Alexandria, Va. "Employers report difficulty sourcing workers across most sectors. The business community needs to work together with government to find ways to encourage the millions of people on the sidelines to come back into the labor force."

Nick Bunker, the economic research director for North America at the Indeed Hiring Lab, said that the April jobs numbers might seem like a letdown compared to previous monthly results, but in context "they are quite impressive. Extraordinarily high levels of demand for workers is leading to fast job gains despite the low levels of joblessness. The outlook for the U.S. economy is highly uncertain, but the labor market continues to be a source of strength."

Gains Across Industries

Leisure and hospitality employers once again reported the biggest employment gains in April, with 78,000 new jobs. About 44,000 of those were in bars and restaurants.

"Leisure and hospitality continued to post strong gains but there is still room for further growth," said Julia Pollak, chief economist at ZipRecruiter. "There are still 1.4 million fewer jobs in that sector than before COVID, and restaurant dining, hotel occupancy, and air travel continue to pick up."

Other sectors with employment gains included manufacturing (55,000), transportation and warehousing (52,000), professional and business services (41,000), financial activities (35,000) health care (34,000) and retail (29,000), primarily from jobs added in food and beverage stores.

"The public sector is still lagging behind, both when it comes to employment and wage growth," Pollak said. "Data from the Atlanta Fed Wage Tracker confirms that recent wage growth has been higher for nonunionized workers than for unionized workers. Expect public sector workers to demand sizeable cost-of-living adjustments when they renegotiate their contracts."

Unemployment Remains Down

The unemployment rate held in April while the number of unemployed people dipped to 5.9 million. In February 2020, prior to the COVID-19 pandemic, the unemployment rate was 3.5 percent, and the unemployed numbered 5.7 million.

The number of workers filing for unemployment benefits is also at a historically low level. But an alternative measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons, sometimes referred to as the "real" unemployment rate, edged higher to 7 percent. And the number of long-term unemployed (those jobless for 27 weeks or more) came in just under 1.5 million.

"We are watching closely the number of long-term unemployed workers, which saw a slight increase in April and continues to exceed pre-pandemic levels," said Becky Frankiewicz, president of ManpowerGroup North America. "The long-term unemployment level couples with employers and workers alike feeling the pain of soaring inflation, interest rate shifts, and erratic financial markets. Driving progress will involve a combination of upskilling and reskilling efforts and flexibility on the part of employers."

Bunker pointed out that while the unemployment rate remained steady in April, the share of people with a job in relation to the population declined. "But this decline in the employment-to-population ratio for prime-age workers ages 25 to 54 should be put into the context of its recent growth," he said. "The prime-age employment rate is still on track to get back to its pre-pandemic level by July. Another silver lining was that the employment rate for workers ages 55 to 64 also ticked up, continuing its recent rise."

Wage Growth Moderates

Average hourly earnings rose 0.3 percent in April. The annual rate edged down from its March level, and over the last three months, wages rose 0.9 percent, the lowest three-month reading in a year.

"The level of wage growth continues to remain hot as strong demand for workers keeps employers competing fiercely, though wage growth still remains below inflation levels," which has increased 8.5 percent, Zhao said.

Pollak added that "the average is surely being dragged downwards by the rapid return of low-wage workers. That said, inflation is packing a punch and eroding the wage gains for many workers. Nonetheless, nonsupervisory employees in leisure and hospitality, and in transportation and warehousing, are coming out ahead, with annual wage growth of 12.6 percent and 11.2 percent respectively. In leisure and hospitality, those workers have now enjoyed double-digit year-over-year wage growth for 11 straight months."

Experts believe that the strong demand for labor, the shortage of available workers, and the decline in the labor force participation rate will add to wage pressures.

New research from Glassdoor shows that salary expectations from job seekers have surged in 2022. "The increase in pay job seekers are expecting in their new jobs has surged 43 percent year-over-year in the first quarter of 2022, though the pace of the increase has slowed from the hot wage growth seen in summer 2021," Zhao said.