3 Big Jobs Trends To Watch For in March Jobs Report

April 2, 2015

With millions of job openings worldwide, Glassdoor is quickly becoming one of the largest jobs marketplaces in the world. As our footprint grows, it’s more important than ever for Glassdoor members to keep a pulse on what’s happing in the broader economy.

On Friday, the Bureau of Labor Statistics will release its latest “Employment Situation Report” with updated figures on job growth and wages for the month of March.

Here are three big jobs trends in the U.S. we’re watching closely at Glassdoor.

1. Wage Growth Drivers
Wages should be growing around 3 – 4 percent per year in good times. One of the hallmarks of our long recovery from the “Great Recession” has been painfully slow wage growth of about 2.0 percent year-over-year—a key indicator Fed officials are waiting for improvement in before hiking interest rates back to pre-crisis levels.

While the wage picture overall is gloomy, understanding why means looking deeper at specific industries. In the graphic below, we divide wage growth into 10 industries: the black line shows overall wages and the other lines show separate industries. This view highlights the incredible diversity of pay conditions across industries and throughout the labor market.

Back in late 2008 and early 2009—the last time wages were growing strongly—pay growth was largely fueled by double-digit growth in mining and logging wages (which includes oil and gas workers benefitting from booming hydraulic “fracking”) and fast-growing wages in construction and business services before the full effects of the housing crisis were being felt.

Today, the story is very different. Energy sector wages are dipping sharply along with falling oil prices. Mining and logging wages were flat in February and grew at just 1.1 percent over the past six months. Adding to the slowdown is sluggish manufacturing wages growing at just 1.4 percent over the past half year, with few signs of recovery.

On the plus side, wages for leisure and hospitality are growing at a healthy 3.6 percent rate over the past half year—the fastest of any sector. And wages in information and business services are today growing close to their long-run averages at 2.9 and 2.5 percent per year, respectively.

In each of these cases, wage growth is being driven largely by individual supply and demand conditions and productivity in these specific industries—not just cyclical factors affecting the overall labor market. Something to keep in mind when reading the tea leaves about future U.S. wage growth.

What to Watch for Friday? Watch for continued wage growth of 2.0 – 2.2 percent in March. A tight labor market is boosting wages in professional services, retail and healthcare, but these gains are being partly offset by falling wages for energy workers and a strong dollar potentially affecting wages for tourism-related hospitality workers. By year-end, we forecast a return to 2.5 – 3.0 percent wage growth as oil prices stabilize and labor markets continue tightening.

2. Continued Strong Job Growth
During the past year, the economy has added an average of 275,000 new jobs per month. The last time that happened was in March 2000. Unemployment ticked down to 5.5 percent in February 2015, and all signs point to continued improvement in the overall labor market.

What to Watch for Friday? Most economists are predicting an average of 269,000 new jobs per month during the first quarter of this year, and an unemployment rate down to 5.2 percent by year end. Watch for a mild pullback compared to the blistering jobs reports we’ve seen recently, as one popular measure of consumer sentiment dipped slightly in March. We’re expecting between 220,000 – 260,000 new jobs in March, and an unemployment rate of 5.3 – 5.6 percent.

3. Sidelined Workers Getting Back into the Job Market
The last recession left a huge number of workers sidelined, meaning they were stuck in part-time jobs or dropping out of the labor force entirely. Today, there are around 6.54 million workers not in the labor force who say they want a job, far above the 4 – 5 million of normal times.

In February we saw some evidence of these workers re-joining the labor force. The two key figures to watch are the “labor force participation rate” and a broader measure of unemployment that includes discouraged and sidelined workers known as “U6” by economists. The labor force participation rate held roughly steady at 62.8 percent in March, but has been on a long, secular decline due to retiring Baby Boomers. A steady rate is evidence that rejoining sidelined workers is helping offset that decline.

What to Watch for Friday? Watch for the slow, steady decline in labor force participation to continue down to 62.2 – 62.6 percent, and a continued improvement in the broader “U6” measure of unemployment down to 10.7 – 11.1 percent.