Companies need workers.
In April’s jobs report, there was an increase in wages and the unemployment rate reached a historic low, indicating that the job market is very tight.
The labor market continued to show strength in April, with wages increasing and unemployment declining, suggesting the Federal Reserve may need to increase interest rates further to tame inflation.
According to the Labor Department, employers added 253,000 jobs in April from the previous month’s revised increase of 236,000 jobs after economists predicted a slowdown in jobs added. The unemployment rate fell to 3.4% and has changed little from the prior month. The Black unemployment rate also fell three-tenths from 5.0% to 4.7%, lessening the gap between White and Black workers.
Black unemployment reached 4.7 %, a historical low.
Wage growth accelerated over the month, which economists did not expect. In addition, industries that saw increased jobs were professional and business services, health care, leisure, and hospitality. Jobs sectors such as retail trade, warehousing, and wholesale trade saw little to no change. Industries expected to be affected by higher interest rates, like construction and manufacturing, recovered from the pullback in March.
The labor market remains robust, unemployment is low, and wages continue to increase for employees. This suggests that the Fed may raise interest rates in their next meeting after recently increasing rates for the 10th consecutive time. The latest bank crises spooked investors and consumers but have shown no effect on the recent jobs report.
The stronger-than-expected jobs report shows a recession is not imminent. But if the Federal Reserve does continue to increase interest rates, a recession with layoffs and rise in unemployment may not be avoidable.
“We do have a recession probability estimate, over the next 12 months to 75%,” said Joe Brusuelas, chief economist, RMS.
He said the recession would happen over the next 12 months due to a lag impact of Federal Reserve rate hikes. He says we are just beginning to feel the effects of high-interest rates.
An indication that the recession may be beginning is that the jobs opening and labor turnover data reported that job openings have declined and layoffs have increased, which may affect everyone, especially minorities, because, in a recession, Black and Latinos are the first ones fired.
“It is very likely that Blacks and Hispanics are going to be more affected in terms of unemployment rate, and also in terms of the time that takes individuals that have become unemployed to find another job,” said Alfonso Flores-Lagunes, an economic professor at Syracuse University.
The report also shows that Labor force participation, at a 62.6 percent rate, remained unchanged in April. The report shows people are still looking for work, but there is a “scarcity of labor in the US economy that is impacting business,” said Kenneth Kim, a senior economist at KPMG.
“In order for businesses to continue to grow revenue, they are still competing for labor in order to hire a workforce to help their businesses grow,” said Kim.
Shirley Wilson, a daycare owner of Twinkling Little Stars And Night Care, located in Philadelphia, is having difficulty filling in jobs opening at the daycare she has owned for 14 years.
“I’ve never seen nothing like it in my life, people don’t want to work in daycares,” said Wilson.
She says it is tough to hire younger workers because there is competition, and daycares pay less than other jobs. But she does have luck hiring older women for workers who make extra money to offset high prices.
The competition has made employers anxious to hire since there are not enough workers to fill positions. Terry Bankston, the director of the Career Services at Delaware State University, said employers are hiring on the spot at Delaware State University Career Fair– to fill in positions. He said college students could find jobs quickly, and hospitality and tourism were the two main sectors hiring.
“Mohegan Sun casino, out of the Connecticut area, came in, they had hired two people. Great Wolf Lodge out of the Poconos areas hired three or four, high-end hotels hired about five students,” said Bankston.
Since the job market remains tight and wages growth continues to rise, the Fed will make their decision after other data is released.
“We’ll be driven by incoming data, meeting by meeting, and we’ll approach that question at the June meeting,” said Jerome Powell, the chairman of the Federal Reserve.