White Women Benefit Most from March Hiring Spree

Payroll employment jumped by 916,00 jobs in March, the strongest pace since last August. That still leaves us 8.4 million jobs in the hole from February 2020 but represents a much needed boost in momentum one year after the onset of the crisis.

Private sector hiring expanded by 780,000, led by gains in leisure and hospitality. Restaurants, bars and accommodations all increased hiring with the lifting of restrictions on indoor venues and a surge in spring break travel. Public sector employment rose by 136,000 as schools that had been closed started to reopen. Some school districts actually have extra money on hand because they laid off staff and idled schools during the pandemic.

Professional services added 66,000 jobs while gains shifted into permanent over temporary hires. That reflects more optimism that the rebound in growth will be sustained. (Temporary hires had dominated professional hires in recent months.)

Transportation and warehousing jobs increased by 47,500, mostly among couriers. That reflects a rebound from weather-related weakness earlier in the year but also underscores that the shift to delivery services is not likely to disappear anytime soon. Some of the shift from in-store to online retail will be permanent, post-pandemic.

Retail added 22,500 jobs, driven by gains in vehicle and clothing sales. People are finally buying more than just new shirts to wear to Zoom meetings as they get vaccinated and ready to step out on the town again.

Health care employment was weaker than expected. Physicians and dental offices added to their ranks as people returned for routine visits; the backlog is substantial in some markets. Hiring at hospitals flatlined as retirements overshadowed new hires; many of our frontline workers have become burned out caring for COVID patients over the last year.

Employment in the goods producing sector was solid. Construction jobs jumped by 110,000, more than half of which were among specialty contractors. Residential construction is rebounding from a weather-related lull in February. The surge in specialty commercial contractors reflects the reconfiguration of offices by companies looking to reopen with at least a hybrid of in-office and work-from-home. Unusually bad winter storms in the oil path also triggered a pickup in repairs. Almost the entire state of Texas suffered power outages in response to unusually frigid weather; pipes also burst.

Manufacturing employment increased by 53,000. Gains were broad-based with the exception of transportation. Vehicle producers were forced to idle some workers in response to computer chip shortages, largely out of Taiwan. That led to a drop in inventories on dealer lots and a jump in prices. Prices for used vehicles, which are used to finance trade-ins, are rising at a double-digit rate.

Average hourly earnings edged down 0.1% as the composition of job gains moved down the wage ladder and more low-wage jobs returned to the mix. Earnings were up 4.2% on a year-over-year basis, but that is also a misrepresentation of actual wage gains; total wages are still being skewed upward by the number of higher wage jobs. Average weekly hours rose to 34.9 in March from 34.6 in February. Those gains were driven by a pickup in hours worked in construction, mining and logging, which mostly accrue to men. The hours worked will add more to overall earnings than any change in hourly wages.

Separately, the unemployment rate dropped to 6.0%, which is less than one would expect given the magnitude of job gains. The main reason is an increase in the participation rate. Young mothers who have little to no access to child care returned en masse to the labor force as schools reopened. Nearly half a million mostly white women returned to the labor force, while white men continued to drop out. We are still down 3.9 million workers who dropped out of the labor force since February 2020. The prime-age employment to population ratio, which the Federal Reserve has flagged, rose from 76.5% in February to 76.8% in March. That is still down from a peak of 80.5% in early 2020 and an all-time peak of 81.9% in April 2000. The participation rate for prime-age women is still down more than the rate for men since 2000.

The actual unemployment rate, which the Federal Reserve has been watching closely, dropped from 9.5% in February to 8.7% in March. Those figures include the nearly four million workers who remain on the sidelines and those who were misclassified as absent due to COVID, but were actually unemployed.

The number of workers forced to accept part-time instead of full time work fell slightly, but remained close to six million workers, which is up 1.4 million from a year ago. The ranks of the long-term unemployed (more than 27 weeks) continued to creep higher. That underscores the gap between workers who can easily regain work after bouts of unemployment versus those who are marginalized. Research on initial unemployment applications in California showed that many initial claims were filed by workers who had been called back over the summer and then lost work again during the winter surge in COVID cases. They had an easier time regaining employment than the long-term unemployed.

We will be watching the long-term unemployed closely as they are most at risk for scarring in the wake of the crisis. Unemployment is demoralizing. After six months, physical and mental health tend to suffer, family structure deteriorates, the wellbeing of children is compromised and vicious cycles of joblessness and lost earnings take hold in hardest hit communities. The goal is to break that cycle with more aggressive fiscal stimulus.

The major threat is the rise in more contagious variants, which has upped the pace of cases in some states. Ramping up vaccinations is helping but we are still not getting enough in arms to stop that spread. Some epidemiologists worry about a fourth wave of cases, which would put a damper on gains in April in the wake of spring break.

Bottom Line
We have finally regained momentum in the labor market. The key is to sustain the reopenings of the economy, while preventing a resurgence in cases. Ramping up vaccinations is helping but may not prevent another setback in April. Women have proven their willingness to return with the reopening of schools, but the differences by race remain significant. March is a month to celebrate, but we are holding the champagne for more workers to come back from long-term unemployment. I will breathe a little easier once those who were hit hardest are back.

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