March Jobs Report Preview: Job Market Nearing Inflection Point

March 29, 2022

This Friday, the Bureau of Labor Statistics (BLS) will release the March jobs report. Jobs growth is likely to slow modestly but still remain strong amidst the war in Ukraine and a receding Omicron wave. Jobs growth has been strong despite the Omicron wave over the last few months, indicating that employer demand remains sky high, keeping payroll gains elevated. While the war in Ukraine is unlikely to significantly impair U.S. job gains in March, the disruption to global energy markets and surge in inflation does present a risk to the economic outlook moving forward. We’re at an inflection point in the recovery where the fundamentals of the job market remain strong, but risk factors continue to accumulate.

Here are three trends we’ll be watching for in the March jobs report:

  • Jobs growth is likely to slow modestly but remain strong: 678,000 jobs were added in February, the highest since July 2021. With the war in Ukraine, economic uncertainty rising and surging energy prices, we may see a modest slowdown in hiring in March. However, employer demand remains strong, which should sustain a healthy level of hiring.
  • Muted rebound in wage growth: Wage growth is likely to pick up in March, rebounding off the largely unchanged earnings in February. Wage growth is spreading out from industries like leisure & hospitality, where wage growth peaked last summer, to more industries.
  • Nearing pre-pandemic job market milestones: On-pace jobs growth in March would put the labor market on track to return to pre-pandemic employment levels this June.  Prime-age employment population ratio is on a similar trajectory, only 1 percentage point below pre-pandemic levels. 

The Fed’s tightrope act

The Federal Reserve began raising rates earlier in March, signaling an inflection point in the recovery as policymakers shift from a focus on bolstering employment to taming inflation. The Fed has argued that they can keep job growth strong even amid rate increases because of how far job openings are above normal right now.

Job openings are still well above pre-pandemic levels and signal extremely high employer demand, but the plateau in job openings in the last few JOLTS reports is a sign that demand for workers may start to normalize in coming months, especially as the effect of rate hikes take hold. If job openings have peaked, the coming months will be a crucial test of the Fed’s hypothesis that raising rates and slowing the economy will reduce competition for workers but ultimately have a muted impact on hiring. 

Notably, the start of this rate hike cycle also coincides with a 6.6 percent unemployment rate for Black workers. The Black unemployment rate is still roughly double the white unemployment rate as of February 2022. However, the Black unemployment rate is significantly lower than when previous rate hike cycles started in 2004 (10.2 percent) and 2015 (8.5 percent).

Ultimately, the Fed has a delicate balance to strike, cooling down the job market from white-hot to “only” red-hot without dousing the recovery in cold water. There is still room for the recovery to run to pull more workers back into the labor force and to expand opportunities for more Americans, and 2022 will be a particularly challenging year for the Fed as it tries to walk the tightrope of its dual mandate.

The ripple effects of the Great Resignation

The Great Resignation has made headlines as a surge in quits, but what is driving this increase in turnover? Contrary to popular belief, this is not due to declining interest in work; rather, the increase in quits is likely simply the natural result of a tight labor market.

The surge in quits we’ve seen is mirrored by a surge in job openings, and the two measures have tended to move hand-in-hand, even during the last two years despite pandemic forces. The dramatic increase in demand for workers is pushing employers to compete fiercely, and that gives current workers more opportunities to find a better fitting or higher paying job. 

This effect is also now rippling out to other workers as well. Wage growth has been surging for “job stayers”, according to the Atlanta Fed Wage Growth Tracker. Wage growth is almost always higher for “job switchers” who often set the market for pay, but surging wage growth is trickling down to employees who aren’t leaving as well.


The job market is strong, but we’re at an inflection point in the recovery. The Federal Reserve has begun hiking interest rates, energy prices are spiking due to the war in Ukraine, the threat of the pandemic—including and beyond the current Omicron BA.2 surge in Europe—still looms large, and the effects of earlier fiscal stimulus are fading. Recession talk is likely premature, but as we’ve seen repeatedly over the last two years of the COVID-19 pandemic, the only certainty has been economic uncertainty.

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