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Talent Talk: That Stellar Jobs Report that Just Dropped? It Only Tells Part of the Story

Article-Talent Talk: That Stellar Jobs Report that Just Dropped? It Only Tells Part of the Story

Image courtesy of Alamy/Xhico Help wanted sign behind US flag
The consensus among analysts is that if the recovery holds, labor market “health” will reach pre-pandemic levels this summer. But wait, there’s more.

On Friday March 4, the US Bureau of Labor Statistics reported that nonfarm payrolls jumped 678,000 in February, while the unemployment rate fell to 3.8%. If you read the report further, there were revisions to December and January that added another 92,000 jobs beyond the initial reports.

On the surface, this would indicate that we are close to being back to pre-pandemic levels, and that perspective is being widely reported. For example, Nick Bunker, Economic Research Director at the job search site Indeed, said, “If the recovery can keep up its current tempo, several key indicators of labor market health will hit pre-pandemic levels this summer.” The consensus is that we are “almost there.”

I am going to tell you there is more to the story. Economists led by Jan Hatzius of Goldman Sachs Group Inc. recently concluded a study that compared the total number of jobs in the US economy, including those that are open (more than 10 million), with the size of the labor force.

The study concluded that if every person who is available to work had a job — in other words, zero unemployment — there would still be 4.6 million unfilled jobs. We have not seen a number that high since World War II, when 16 million Americans served in the armed forces. Let that sink in.

In separate research, economists including Jason Faberman at the Federal Reserve Bank of Chicago concluded that the labor force is smaller than traditional data would indicate, which helps explain the Goldman Sachs study. Faberman points out that the pandemic has drastically reshaped the labor force and the economists have not caught up with that yet.

Goldman Sachs predicts what we told Talent Talk readers two months ago: Employers are in for an even tougher, and more expensive, proposition finding workers in 2022. Goldman Sachs economists predict an average wage growth of 5%.


About the author

Paul Sturgeon is CEO of KLA Industries, a national search firm specializing in plastics, packaging, and polymer technology. If you have a topic you would like to see discussed, a company that is growing, or other ideas for this blog, e-mail Sturgeon at [email protected].

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