This morning, the Labor Department will report how many jobs employers added to their payrolls in March. Economists expect a healthy gain. But how much longer can the labor market keep it up?
Jobs may be approaching their as-good-as-it-gets moment. Employers have added half a million workers per month to payrolls, on average, for the past year, with some states close to their lowest-ever unemployment levels. (“I’m in hot demand, baby,” a bartender in Nebraska told The Times.) But a number of economists say that rising inflation and higher interest rates could soon shift the labor market into a lower gear. Goldman Sachs’s top economist, Jan Hatzius, predicts that the pace of hiring will slow to 200,000 a month over the next quarter, and drift downward from there.
The big problem is a lack of workers. Long before the pandemic, the percentage of Americans participating in the work force — those who had a job or were actively looking for one — had been declining. That had a lot to do with demographics, namely retiring Boomers. The participation rate has bounced up from its pandemic low, but has a ways to go to recover its prepandemic level, much less the higher rates of previous decades. If the long-term trend of falling participation rates resumes, “there will not be the numbers of people out there to fill these jobs,” Joel Naroff of Naroff Economics told DealBook.
The pandemic accelerated the drop in participation for all workers, not just older ones. It has also...
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