MUNCIE – The April jobs report provided two very strong indications of the economy, both suggesting that propulsion myths about labor markets are mistaken.
With the new monthly national unemployment numbers now out for April, Economist Michael Hicks, the Director of the Center for Business and Economic Research at Ball State University shares his thoughts.
This month was widely believed to be a strong month, with consensus estimates of nearly a million jobs created. The actual job creation numbers were about one fourth that, with 266,000 new jobs and downward revisions of 78,000 over the past two months.
This jobs report suggests the economy recovery continues, but is not accelerating. The biggest shock of this jobs report was wage growth.
There are widespread claims of a labor shortage, that is particularly acute in the leisure and hospitality sectors. However, economy wide, wages in April are just 0.3 percent higher in nominal terms than last April. After adjusting for inflation, economy side wages are down almost a full percent from April of last year.
Wages in the leisure and hospitality sector were down by almost 2 percent over the last year, one of the largest declines in the data.
Though hospitality and leisure experienced good wage growth since last month, these data make it clear that these sectors are not facing a labor shortage that is sufficiently acute for them to adjust wages upward.
Part of these declines may be attributable to changes in the composition of the labor force since last year. But, even accounting for that, this jobs report convincingly any rebuts claims of a labor shortage.
Importantly, workers are leaving the UI roles at a rate almost five times that of new job creation over the past month. This makes clear there is an abundant supply of men and women not receiving compensation.
In summary, this jobs report suggests a modest, but not accelerating recovery, and shatters the myth of labor shortages, especially in the leisure and hospitality sectors, whose average wages remain lower than at the depths of the downturn last April.