More warehouse workers, fewer waiters. More health store employees, fewer in public schools. The overall job market is getting back to its pre-pandemic strength, but it looks a lot different.
Courtenay Brown writes that disruptions over the past two years have shaken up the composition of the labor force — “with big implications for how industries will have to adjust to a longer-term worker shortfall.”
Economist Ellen Gaske at PGIM Fixed Income says, "I'm not looking for recovery to pre-pandemic levels in each industry. Some workers have left for greener pastures, and that's a good thing.”
She added, "There is more opportunity for workers to return to new jobs — where the industries are growing and the outlook is potentially brighter. That churning is what offers up a possibility of stronger productivity gains and increased standard of living."
By Dave Allen for Discount Gold & Silver
More warehouse workers, fewer waiters. More health store employees, fewer in public schools. The overall job market is getting back to its pre-pandemic strength, but it looks a lot different.
Courtenay Brown writes that disruptions over the past two years have shaken up the composition of the labor force — “with big implications for how industries will have to adjust to a longer-term worker shortfall.”
Economist Ellen Gaske at PGIM Fixed Income says, "I'm not looking for recovery to pre-pandemic levels in each industry. Some workers have left for greener pastures, and that's a good thing.”
She added, "There is more opportunity for workers to return to new jobs — where the industries are growing and the outlook is potentially brighter. That churning is what offers up a possibility of stronger productivity gains and increased standard of living."
Is Job Market Pot Boiling Over?
Brown and her Axios colleague Neil Irwin believe that the “high-pressure job market may finally be starting to release a little steam.”
That, they say, is the key takeaway from the latest government job numbers, showing an extremely steamy labor market that at the same time appears to be moving toward a less overheated state.
The Labor Department reported Friday that employers added 390,000 jobs in May — the lowest job growth in a year.
The headline unemployment rate was unchanged at 3.6%, holding close to what the government and its talking heads say is the lowest levels seen in the past half century.
That the more accurate figure is actually closer to twice that amount – the U-6 jobless rate is 7.1% (0.1 percentage points higher for the third straight month) – I guess is beside the point.
Other details suggest a job market that’s starting to come into balance. The number of adults in the labor force — either working or looking for work — rose by 330,000.
Wage growth, while still strong at 0.3% for the month, fell back from its recent highs. Over the last year, average hourly earnings are up 5.2%, compared to 5.5% in April.
Policymakers at the Federal Reserve and in the White House want to see a labor market that’s healthy overall but cools from its hot-potato levels earlier in the year – which tend to fuel higher inflation.
President Biden wrote in an op-ed, "If average monthly job creation shifts in the next year from current levels of 500,000 to something closer to 150,000, it will be a sign that we are successfully moving into the next phase of recovery.
"This kind of job growth is consistent with a low unemployment rate and a healthy economy." In that sense, the May numbers are what the president and his economists hope to see — a gradual slowdown in the labor market, but not a sudden stop.
D.C. policymakers are working on a difficult, and nearly impossible, task in trying to cool off inflation pressures without a recession. But things apparently went according to plan last month.
Most Lost Jobs Have Returned
With May’s job gains, about 96% of jobs lost during the pandemic are back.
The private sector has recovered 99% of the jobs lost since the pandemic began, but the public sector has regained just 58% – one example of the big pothole that persists in certain areas of the economy.
Other industries have recovered and then some. Here are the sectors that the BLS says have recovered the most and the least jobs since February 2020:
The transportation and warehousing sector – package couriers and truckers – with pandemic gains of 709,000 jobs, has never made up a larger portion of all jobs, reflecting the historic demand for goods.
Professional and business services have regained the most since early 2020, with 812,000 jobs. Retail trade (159,000), financial activities (79,000), information (64,000) and construction (40,000) follow.
At the bottom of the jobs ladder are government (down 615,000 jobs), education and health services (-340,000), other services (-259,000), mining and logging (-68,000) and wholesale trade and utilities (-25,000).
A collision of structural and cyclical forces – some already underway before the pandemic hit – is pushing workers away from some jobs and toward others, according to a recent report by the Burning Glass Institute.
Among the changes the BGI point out are the remote work allure. Economist Julia Pollak at Ziprecruiter said:
“People want to move out of in-person roles — like leisure and hospitality or education — and move toward the kinds of occupations and industries with more flexibility" for remote work.
The other big change is the goods spending boom. When the pandemic struck, consumers who were stuck at home bought more goods than services.
But economists expect employment in consumer goods to cool off as spending on services continues to bounce back.
Last but not least, where the wages are has changed. Pollak noted, "Private sector employers have an advantage in this environment. They can adjust their compensation plan and policies very quickly."
The public sector has been slower to respond, one factor perhaps pushing these workers to other companies.
So, as we prepare to head into another hot summer, America's labor market recovery has been just as toasty. The big question remains, which industries fully recover, and which don't.