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Amazingly, the U.S. job market continues to roar. Here are the 5 things to know
By: Scott Horsley | NPR
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WASHINGTON, D.C. (NPR) — It’s still a good time to be looking for a job.
The latest employment report from the Labor Department showed the country’s job market remained red hot, with 339,000 jobs added in May.
It was a number that blew past expectations, considering the headwinds facing the economy including higher interest rates. Analysts had forecast around 190,000 jobs would be added.
In addition to last month’s big number, job growth for March and April – which were already pretty solid – were revised even higher, by a total of 93,000 jobs.
Robust job growth is good for the economy. But it could also complicate the Federal Reserve’s job in fighting inflation.
Here are five things to know about the country’s sizzling jobs market – and what it means for the economy.
The gains were remarkably broad based
Job growth last month was widespread, in an indication of how strong the labor market was in May.
Health care, hospitality and business services each added tens of thousands of jobs. Even construction companies added 25,000 jobs, despite the drag on the housing market after the Fed sharply raised interest rates.
The only industries showing job losses last month were manufacturing, which lost 2,000 jobs and “information,” — which includes media and software companies — which shed 7,000 jobs.
More people are joining the workforce
During the pandemic one of the big areas of concern was how many people left the workforce, for reasons including child care availability and health worries. The shrinking labor force left many employers scrambling for workers.
That has been changing in recent months.
Although the share of adults who are working or looking for work was unchanged last month, more people in their prime working years are coming off the sidelines.
The share of people aged 25-54 who are in the workforce rose to 83.4% last month — the highest level since 2007. And the share of women in that age range who are working or looking for work rose to 77.6%, the highest level since the government started keeping records in 1948.
The labor force has also benefitted from a rebound in immigration, which dropped sharply during the worst of the pandemic.
Foreign-born workers accounted for more than half the growth in the labor force last year.
Wages are rising
Not only are employers adding jobs, they are also generally paying more.
Average wages in May were 4.3% higher than a year ago. Leah Koch-Blumhardt, whose family runs the Holiday World and Splashin’ Safari theme parks in Indiana, says raising wages has made it easier to recruit seasonal workers this summer.
Koch-Blumhardt said they are paying younger teenagers $13 an hour — up from $10 last year — matching the theme parks’ pay for 18-year olds.
“That makes it a very competitive rate for a 16- or 17-year-old in this area,” she says.
But higher wages could make fighting inflation harder
Rising wages are good for workers, but they can also put upward pressure on prices, making it harder for the Fed to get control over inflation.
The Fed has been raising interest rates aggressively, and policy makers will need to take into account the latest jobs data when they gather again in mid-June.
For now, betting markets expect the central bank to leave interest rates unchanged at its June meeting, after raising rates by 5 percentage points since March of last year, the fastest increase since the early 1980s.
And somehow, the unemployment rate rose
The unemployment rate, which is compiled from a separate survey of households, paints a somewhat less rosy picture of the job market.
After matching a half-century low of 3.4% in April, the unemployment rate inched up to 3.7% in May. That’s still very low by historical standards, but the uptick joins other data suggesting individuals aren’t quite as upbeat about the job market as they had been.
Fewer workers are quitting jobs, for example, in a sign that they’re less confident of finding a better job elsewhere.
In another possible warning sign, the unemployment rate for African Americans jumped to 5.6% in May after falling to a record low of 4.7% the month before.
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