- The March jobs report trounced forecasts, but some unemployment gauges show a steep climb ahead.
- The “real” unemployment rate used by Fed Chair Powell and Treasury Secretary Yellen fell to 8.7% from 9.1%.
- The measure includes misclassifications and workers who dropped out of the labor force since February 2020.
- See more stories on Insider’s business page.
The March jobs report was a hugely positive surprise.
The Bureau of Labor Statistics said Friday that 916,000 nonfarm payrolls were added last month. That compares to the 660,000 expected by economists surveyed by Bloomberg and an upwardly revised gain of 468,000 jobs in February. The headline unemployment rate fell to 6%, matching the consensus forecast.
The data signals that the $1.9 trillion stimulus passed in March and gradual reopening drove a strong rebound for the labor market. Leisure and hospitality businesses – those hit hardest by the pandemic and related lockdowns – counted for one-third of the month’s additions. Construction firms added roughly 110,000 payrolls after hiring contracted during the prior month’s harsh storms.
Still, alternative metrics show there’s plenty of progress to be made before the economy fully retraces its pandemic-era losses. Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen have touted a “real” unemployment rate that includes workers that have been misclassified as having a job while they’re on pandemic-related furloughs and Americans who dropped out of the labor force since February 2020.
By Insider’s calculations, that rate fell to 8.7% in March from 9.1%. That level suggests 14.3 million Americans are still jobless.
Separately, the Bureau of Labor Statistics’ broader read of nationwide unemployment remains at worrying highs. The U-6 rate – which includes Americans employed part-time for economic reasons and workers only marginally attached to the labor force – dipped to 10.7% from 11.1%.
The rate of job growth seen in March still pushes a full recovery well into the future. Even if the US continues to add 916,000 jobs every month, it would take until January 2022 to lift employment back to levels seen before the pandemic.
“Today’s report confirms that labor market conditions are rapidly heating up but reaching broad-based and inclusive full employment will be a multi-year process,” Lydia Boussour, lead US economist at Oxford Economics, said in a note.
The White House is already teeing up its next booster for US job growth. President Joe Biden revealed a $2.3 trillion spending plan on Wednesday. The so-called American Jobs Plan includes funds for restoring roads and bridges, building affordable housing, and installing a nationwide broadband network, among other projects. The proposal should create millions of union jobs over the next eight years, according to the president.
“Now it’s time to rebuild,” Biden said during his announcement, adding: “Wall Street didn’t build this country. You, the great middle class, built this country, and unions built the middle class.”