Strong Job Growth in March as Vaccine Distribution Expands and the American Rescue Plan Ramps Up

A solid 916,000 jobs were added in March, the strongest job growth we’ve seen since the initial bounceback faded last summer. Even with these gains, the labor market is still down 8.4 million jobs from its pre-pandemic level in February 2020. In addition, thousands of jobs would have been added each month over the last year without the pandemic recession. If we count how many jobs may have been created if the recession hadn’t hit—consider average job growth (202,000) over the 12 months before the recession—we are now short 11.0 million jobs since February.

Even at this pace, it could take more than a year to dig out of the total jobs shortfall. However, today’s number is certainly a promising sign for the recovery, especially as vaccinations increase and vital provisions in the American Rescue Plan (ARP) have continued to ramp up since the March reference period to today’s data. The benefits of the ARP will continue to be captured in coming months.

Key points of note in today’s report:

• The largest jobs gains were in the sector most hurt: leisure and hospitality employment increased by 280,000 in March. Even with this improvement, leisure and hospitality employment—the lowest-paid sector in the U.S. economy—is still down 3.1 million jobs since February 2020.
• Public-sector employment—notably in state and local education jobs—finally saw signs of life in March, likely due at least in part to the impact of the state and local government aid in the ARP. State and local government employment rose 129,000 in March; 97% of that increase (125,600 jobs) were in state and local education employment. Even with these improvements, state and local education employment is still down 863,200 since February 2020. I’m hopeful here again that ARP provisions to state and local governments will provide a necessary boost in coming months.
• About one-fifth (21.0%) of the workforce teleworked because of the coronavirus pandemic. This means the vast majority of workers—disproportionately low-wage workers—are physically going to work. While the ramp up in the distribution of the vaccine is a positive trend, we are still nowhere near herd immunity and need to heed health officials in opening guidelines.
• While the overall unemployment rate fell from 6.2% to 6.0%, the labor participation rate only improved slightly. As it becomes safe to reopen, I expect many more workers to return to the labor market seeking jobs.
• The Black unemployment rate improved last month, but remains at 9.6%, far higher than any other group.
• Long-term unemployment continued to rise in March, with 4.2 million workers unemployed 27 weeks or more.

In addition to the 9.7 million officially unemployed workers in March 2021, we must add four more groups of economically hurt workers:

• First, the  636,000 workers misclassified as “employed, not at work.”
• Second, the 2.7 million undercount of unemployed workers, found even in normal times.
• Third, the 4.8 million workers now out of the labor force and not counted among the unemployed—measured by the differential between the size of the current labor force and what the labor force would be if the labor force participation rate hadn’t dropped over the last year.
• Fourth, the 5.8 million workers who experienced a drop in hours and pay because of the pandemic.

In total, this means that 23.6 million workers are currently harmed in the coronavirus downturn. We include the 5.7 million baseline unemployment level prior to COVID as part of the number hurt right now because job search was made much more difficult by the labor market impacts of the recession. We include the 2.7 million estimated undercount of the unemployed prior to the start of COVID based on Ahn and Hamilton (2021) because again job search was made much more difficult by the labor market impacts of the recession.