Hiring has boomed in transportation and warehousing, and payrolls in retail trade are now higher than before the health crisis. Two years after the onset of Covid-19, the labor market has adapted to reflect shifts in spending that’s heavier on goods and lighter on services.
The leisure and hospitality sector remains 1.5 million jobs short of its pre-pandemic peak.
That’s the effect of “the stay-at-home economy” and while spending patterns will likely revert over time, the U.S. is not going back to how they were spending, how they were hiring, at least not overnight.
The March jobs report, out Friday, will likely show continued improvement across the U.S. labor market, hopefully offering a relatively cleaner read compared to recent reports affected by omicron.
Economists see an acceleration in wage growth and a pickup in labor force participation. They also estimate employers added about a half million jobs in the month as pandemic restrictions faded.
Average hourly earnings for nonsupervisory workers in leisure and hospitality have jumped over 15% since February 2020. Even so, the sector typically pays less than all other major industries.
Nationwide, employers across industries have increased pay to attract and retain workers amid near-record vacancies.
Increasing wages have put pressure on consumer prices, inflation is costing the average household an additional $5,200 this year for the same goods and services purchased in 2021.
Federal Reserve Chair Jerome Powell said earlier this month “Wages moving up is a great thing, but the increases are running at levels that are well above what would be consistent with 2% inflation.”
Decades-high inflation is raising the financial incentive to work. Close to 17% of Americans cited inflation, currently running above wage gains, as the top issue facing the country, the most since 1985.
Employers have been fighting over the same small pool of available workers, giving many Americans the opportunity to search for higher pay or better working conditions in a different industry.
It is expected that higher labor-force participation will ultimately help curb the pace of compensation gains as labor supply moves closer to meet businesses’ demand.
