Roaring Back: Employers Add 916,000 Jobs As Economy Emerges From Winter Slump

Apr 2, 2021
Originally published on April 2, 2021 9:34 am

Updated April 2, 2021 at 12:34 PM ET

Hiring accelerated last month as U.S. employers added 916,000 workers to their payrolls. It was the largest job gain since August, fueled in part by an improving public health outlook and a new round of $1,400 relief payments.

President Biden cheered the encouraging jobs report during remarks to reporters at the White House.

"Today's report is good news," he said. "We still have a long way to go. But I know that we're going to get there. And we're going to get there together."

The unemployment rate dropped to 6%, from 6.2% in February. Unemployment among African Americans and Latinos remained elevated, at 9.6% and 7.9% respectively, but the gap with whites narrowed in March. Unemployment among Asian Americans rose to 6%, from 5.1% in February.

Job growth has improved in each of the last three months after a winter surge of coronavirus infections brought hiring to a standstill in December.

"The labor market recovery has awakened from its winter slump," said Nela Richardson, chief economist at the payroll processor ADP.

Job gains for January and February were also revised upward.

Over the past year, bars and restaurants have been particularly sensitive to the ups and downs of the pandemic. Those businesses added 176,000 workers in March.

"The weather is getting better. People want to get out. They're enjoying themselves more than they did before," said Ray Sandza, vice president of data and analytics for Homebase, which provides payroll software to restaurants and other small businesses. "Businesses can see the corner rounding, so they're willing to bring more people on."

Construction companies added 110,000 workers in March after a slowdown in February when winter storms blanketed much of the country. Schools and colleges added 190,000 workers as in-person education gradually resumed.

As more schools reopened, some women who had been forced to stay home with children were able to return to work. The labor force participation rate for adult women rose by four-tenths of a percentage point, more than offsetting a slight drop in the participation rate among men.

Forecasters expect the job gains to continue, provided a recent uptick in coronavirus cases doesn't erupt into a full-blown wave.

Coronavirus vaccinations have ramped up rapidly with an average of 2.9 million shots given daily over the past week. But new infections are also climbing again after falling sharply in February and early March.

"It's almost like a race to try to get the maximum number of people vaccinated before the virus has a chance to mutate into something that we can't handle," said Raphael Bostic, president of the Federal Reserve Bank of Atlanta.

Despite the solid job gains in March, the U.S. is a long way from full employment. There are still 8.4 million fewer payroll jobs in the U.S. now than there were before the coronavirus took hold a year ago.

"Even at a million [additional] jobs a month — which would be an incredible number — we're still looking at least into 2022 before we get to pre-pandemic levels," added Bostic, who was speaking during a presentation to the World Affairs Council of Atlanta on Tuesday. "We've still got a ways to go on the employment front before I think we'll be in a position to really exhale and let the marketplace play out as it will."

This week, Biden proposed an additional $2 trillion in federal spending on infrastructure and other measures, which he described as an investment in the nation's long-term growth. The president plans to meet with lawmakers from both parties to discuss that plan when Congress returns from its Easter recess.

"Debate is welcome," Biden said. "Compromise is inevitable. Changes is my plan are certain. But inaction is not an option."

The president stressed that progress on both the public health and economic fronts could be reversed.

New claims for unemployment unexpectedly rose last week with 719,000 people applying for state benefits and another 237,000 seeking help under a federal program for gig workers and the self-employed.

Manufacturing has recovered more quickly from the pandemic than businesses that rely on in-person services. Factories added 53,000 workers last month.

A survey of factory managers in March found some of the strongest business conditions in decades, putting a strain on parts suppliers and delivery networks.

"That's simply because demand is so great," said Tim Fiore, who compiles the survey for the Institute for Supply Management. "They're great headaches to have."

Factories report rising prices for steel, plastic and other raw materials, which ultimately may be passed on to consumers.

"If demand is not relaxing, people are going to have to pay whatever it costs," Fiore said.

The Federal Reserve expects overall consumer prices to climb by 2.4% this year but says that jump in inflation is likely to be temporary.

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The U.S. job market appears to be in full bloom this spring. This morning, the Labor Department reported that U.S. employers added 916,000 jobs last month. That's the strongest gain since August. Job gains for January and February were also revised upwards. NPR's Scott Horsley is with us.

Scott, good morning.

SCOTT HORSLEY, BYLINE: Good morning, Rachel.

MARTIN: I love good news on a Friday. I mean, this is a big deal, right? What's behind it?

HORSLEY: Rachel, consumers have more money in their pockets - the federal government's been sending out those $1,400 relief payments - and they also have more places to spend it. You know, as coronavirus restrictions are relaxed around the country and as vaccinations are multiplying, people feel more comfortable eating out and shopping. We've seen increased traffic at restaurants and retail shops. That means more hiring in those businesses. It's the opposite of what we saw during the fall and winter, when consumers were locking down and jobs were drying up. This is how Nela Richardson puts it. She's the chief economist at the big payroll processing firm ADP.

NELA RICHARDSON: The labor market recovery has awakened from its winter slump, when there was a surge in new COVID cases in the last three months of 2020.

HORSLEY: We also saw more schools reopening in March, and that means hiring more bus drivers and lunchroom workers and classroom aides. And construction companies did a lot of hiring as the weather improved after those bad winter storms back in February.

MARTIN: The unemployment rate fell last month, too - fell to 6%. Where does all this put the overall jobs recovery?

HORSLEY: Yeah, unemployment was down by two-tenths, which is good. And it's also encouraging that more than 300,000 people joined the workforce last month. Some of those people might have been sitting out the pandemic in earlier months, not looking for work during the wintertime. The labor force participation rate, which we watch pretty closely, inched up just a bit.

We've still got a long way to go to get back to full employment, though. Of the 22 million jobs that were lost a year ago when the pandemic took hold in the U.S., we have so far recovered about 62%. So that leaves about 8.4 million jobs to go. So you know, March was certainly a good month for the job market. We need eight or nine or 10 more good months just like it.

MARTIN: How likely are we to get that?

HORSLEY: We could see a continued surge. There's certainly a lot of pent-up demand out there. People who've kept their jobs during this period have saved up a lot of money, and we could see a surge in travel and entertainment and all the things people haven't been able to do for the last year...

MARTIN: Right.

HORSLEY: ...As people feel comfortable. But as Nela Richardson says, that all depends on keeping the pandemic in check.

RICHARDSON: The continuation of this jobs recovery will depend largely on continued improvement in the containment of the virus through vaccination and other measures.

HORSLEY: This report is actually a snapshot of what was going on in the middle of March. In the weeks since then, we have seen an uptick in new coronavirus cases and hospitalizations. We also saw an increase last week in new claims for unemployment. So as Dr. Fauci told MORNING EDITION today, it's a race between efforts to get more people vaccinated and protected from the pandemic and the evolution of the virus to become more resistant. And the winner of that race is going to determine both our public health outlook and the health of the U.S. job market.

MARTIN: NPR's chief economics correspondent Scott Horsley. Thank you.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.