Job growth slowed markedly in March. It is likely a one-month hiccup. The broad job market conditions will likely re-strengthen in the upcoming months simply because the number of new filing for unemployment insurance has been rapidly declining. In the construction industry, there was no net job over the month implying a weather-related halt. There is, however, an evident shortage of skilled construction workers since the wages in the sector are rising much faster than in other industries.
Diving into the numbers, only 126,000 net new jobs were added to the economy in March compared with the monthly average of 268,000 over the prior 12 months. The 12-month job gain is still impressive with 3.1 million net new job additions. Jobs in the construction industry fell by 1,000 (even after accounting for the normal seasonal patterns.) This is a clear case of temporary condition from excessive cold weather this year since many homebuilders would like to ramp up production by hiring more workers. There were 11,000 fewer workers in the mining and oil exploration. This is not a temporary cut but a possible start of deeper reduction related to lower oil prices.
The unemployment rate did not change and stood at 5.5 percent. But the employment rate – counting how many of the adult population have jobs rather than counting how many do not have jobs – is barely improving and still crawling along the bottom. Only 59.3 percent of adult population is working, compared to 62 to 64 percent in more normal times.
The average worker wage rose by 2.1 percent in March. Depending on a given month, it could be a little better or a little worse than the broad consumer price inflation. In other words, workers in general are not getting ahead and just spinning the wheel like a hamster. The construction industry is one of the few areas where wages are comfortably rising above consumer inflation. In March, construction workers commanded nearly a 3 percent higher pay to $27.23 per hour. The other industry that is quickly raising wage rates is in the leisure and hospitality industry, where wage rose by 3.6 percent to $14.23 per hour, a sign more workers are needed to cater to wealthy travelers.
Those workers who are also homeowners are feeling a little better despite the lackluster wage growth since the typical home value has increased by around $30,000 over the past three years. Sadly though from a societal point of view, we have fewer homeowners and many more renters. That is one big reason why America has become more unequal financially. Finally, for those few with a big exposure to the stock market – about 10 percent of American families – the wealth gains have been more than nice with the stock market having almost tripled from the lows of few years ago. They therefore have been buying vacation homes. Indeed, a very happy life on the top of the world for the few.
Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.