April 01, 2022
Center for American Prosperity
American families feel like they’re falling behind. They’re right.
April 01, 2022
Today’s jobs report reinforces the setbacks American workers have endured this past year. While the report shows that an additional 431,000 jobs were filled in March and the unemployment rate fell to 3.6%, it also shows that hourly wages have only risen 5.6% in the past year. Inflation through February has been measured at 7.9% and the release of the Consumer Price Index (CPI) next week is likely to show that price increases again outpaced wage increases, particularly given the pressure on energy prices. Overall, this means that in inflation-adjusted terms, working has 2.3% less purchasing power than a year ago.
The establishment report estimates that total non-farm payrolls rose to 150.9 million jobs on a seasonally-adjusted basis in March 2022. This corresponds to an increase of 431,000 jobs in March plus revisions to January and February that totaled 95,000. The growth was particularly high in leisure and hospitality, where 112,000 jobs were added. However, that sector is still 1.5 million jobs lower than where it was prior to the onset of the pandemic. Most sectors of the economy saw job growth. The exception is that oil and gas extraction employment fell by 4,000. At a time when energy prices are skyrocketing, the decline in extraction jobs demonstrates the extent to which the Biden Administration has curbed domestic production. Reductions in oil and gas employment last month mean that we are not going to see additional domestic capacity brought online anytime soon.
The major takeaway from the establishment survey is that nominal wages grew just 0.4% in the month of March. While in normal times that would be a healthy increase, that wage growth is not large enough to offset the rise in prices—breaking a 40-year record—that we have been suffering through. For the last twelve months, wages have grown from $30.06 per hour to $31.73 per hour, a 5.6% increase. The most recent Consumer Price Index data we have available is for the 12 months that ended in February and over that time period, prices are up 7.9%. CPI data for March is scheduled to be released next week and we expect another large increase. According to data from the U.S. Energy Information Administration, national average gas prices rose from $3.61 per gallon at the end of February to $4.23 as of March 28, 2022, a 17.2% increase in just one month. This suggests that the one-month increase in consumer prices is likely to outstrip the 0.4% wage growth reported in today’s release. Using the last 12 months of wage increases and the most recent 12 months of inflation data currently available, workers’ real wages have declined approximately 2.3% relative to a year ago.
The household survey showed that the unemployment rate fell to 3.6%, just above the 3.5% unemployment rate prior to the pandemic. The report estimates that 6 million Americans in the labor force were unemployed in March, up from 5.7 million Americans in February. The labor force increased by 418,000 to a total of 164.4 million Americans in the labor force, approximately equal to the size of the labor force prior to the pandemic. This corresponds to a participation rate of 62.4%, up 0.1% from February, but still 1.0% lower than prior to the pandemic. Even though the size of the labor force has recovered, growth in the overall adult population of the United States means that the percentage of adults in the labor force is still below where it was two years ago.
On Tuesday, the Bureau of Labor Statistics released the Job Openings and Labor Turnover Survey (JOLTS) for the end of February. It showed that there were an estimated 11.3 million job openings. With 6 million unemployed and nearly twice that number of job openings, this week’s reports reinforce the need for policies that encourage more Americans to return to the labor force. Proposals like liberals’ Big Government Socialism Agenda would do the opposite. The last thing our economy needs is more government spending that discourages employment. This would cause product shortages to continue and the high inflation rates of the past year to persist.
Michael Faulkender serves as a Visiting Fellow for the America First Policy Institute (AFPI).
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