This Friday, the Bureau of Labor Statistics will release the March jobs report. After a difficult winter wave of the pandemic and a February jobs report muted by severe weather, March may be the month we start to see the economic engine powering up again. These are three things I’m watching for on Friday:
- Over 1 million jobs added: Payroll gains are likely to surge over 1 million in March, as the public health situation improves and vaccines are more widely distributed. The rebound from the severe weather in February may also provide a modest bump.
- Service industries to drive payroll gains: While job gains will likely be seen across all sectors, large gains are expected in industries like food services that can rehire from large pools of furloughed workers or industries like temporary help services that can add workers quickly.
- Unemployment rate to drop below 6 percent: The unemployment rate is likely to drop significantly as temporarily laid off workers are recalled to their jobs. Labor force participation may improve slightly.
Jobs Recovered or Jobs Added?
The U.S. economy is still early into its recovery with 9.5 million fewer Americans employed in February than before the crisis. At this point, payroll gains are still pulling mostly from the large pool of 2.2 million temporarily laid off workers. Permanent layoffs, by contrast, have not changed significantly since August 2020. A decline in permanent layoffs will be a more confident signal of economic healing.
Additionally, 4.2 million fewer workers are in the labor force today compared to before the pandemic. During a more “typical” recovery, early job gains often come from hiring unemployed workers, while pulling workers from off the sidelines and back into the labor force takes longer. This crisis, however, may not fit the traditional pattern of recovery. Many workers remain out of the labor force due to health concerns or child care responsibilities—factors that may improve rapidly as the public health situation improves. The question of when and how quickly workers will be pulled back into the labor force is a crucial one.
Will a Rising Tide Lift All Boats Equally?
Minority workers have been hit especially hard by the pandemic, and February saw an unexpected surge in the Black unemployment rate to 9.9 percent even as the white unemployment rate continued to fall. While month-to-month labor statistics by race are volatile, the March report will provide more evidence as to whether Black workers are benefiting from the recovery to the same degree as other groups.
While a rising tide lifts all boats, returning to the economic status quo ante before the pandemic does not guarantee equity—the Black unemployment rate before the pandemic was 6.0 percent, higher than the current white unemployment rate.
Recovery Poised for a Strong Summer
Economic stimulus from the newly passed American Rescue Plan may help juice the economic recovery as we emerge from the long pandemic winter. Crucially, however, vaccines are still the best economic stimulus. If accelerating vaccine distribution continues and the economy is able to reopen in the coming months, we may be looking at a strong summer with several months of monthly job gains over 1 million.