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The February employment report is expected to show solid job gains

A MARTINEZ, HOST:

The U.S. job market is shifting into high gear. This morning, the Labor Department reported that U.S. employers added 678,000 jobs last month, 678,000 jobs last month, as unemployment dipped just under 3.8%. NPR's Scott Horsley joins us now. Scott, another really strong jobs report, even better than forecasters were expecting. What does it tell us?

SCOTT HORSLEY, BYLINE: A, this is a very positive report. The job gains were widespread. Bars and restaurants, which have been a bellwether throughout the pandemic, added 124,000 jobs. Construction companies added 60,000 workers. Factories added 36,000 jobs. What's more, the job gains for December and January were also revised up. So of the 22 million jobs that were lost in the first couple of months of the pandemic, the U.S. has now regained more than 90%. And Nela Richardson, who's chief economist at the payroll processing company ADP, says we could see additional months of strong job growth as the omicron wave of the pandemic recedes and the health outlook improves.

NELA RICHARDSON: Omicron, which is now fading across most of the country, did not have as much of an economic impact as was expected or even seen in previous waves. But it may have had an effect of keeping some workers on the sidelines due to health concerns.

HORSLEY: A census survey in early January found nearly 9 million people who said they weren't working because either they were sick with COVID or taking care of someone who was. By early February, that number had fallen. But it was still pretty high, just under 8 million.

MARTINEZ: All right. So that number, 8 million, I mean, that has to cut into the job numbers.

HORSLEY: Yeah. A lot of employers say they would hire more people if they had more applicants. We did see the share of people working or looking for work in the U.S. shrink more during the course of the pandemic than it did in many other countries. But there's been some encouraging news on that front as well in this morning's report. Some 304,000 people came off the sidelines in February and joined the workforce. Jay Bryson, who's chief economist at Wells Fargo, thinks there could be more progress in the months to come.

JAY BRYSON: I think, as people start to feel a little bit more comfortable about coming back to the offices, as people feel they don't have to be staying at home with the children anymore, I think you will start to see that number continuing to move higher. But that said, there's a number of people who have retired now and probably aren't coming back.

HORSLEY: And as a result of that smaller workforce, employers are having to pay more to find workers. Average wages in the private sector were up 5.1% in February from a year ago. In the leisure and hospitality sector, wages have jumped 11.2% in the last year. Now, in some cases, those higher wages are contributing to rising prices. And because prices are climbing fast, a lot of workers are finding even larger paychecks don't stretch as far as they used to.

MARTINEZ: Yeah, because inflation now, the highest it's been since the early 1980s. So how much pressure is that putting on the inflation watchdogs at the Federal Reserve?

HORSLEY: A lot. And we're about to see a turnaround at the Fed. You know, for the last two years, the central bank has been keeping interest rates close to zero as part of an aggressive effort to prop up the economy and recover the jobs that were lost to the pandemic. Now, Federal Reserve Chairman Jerome Powell says it's time to start raising interest rates in order to bring prices under control.

(SOUNDBITE OF ARCHIVED RECORDING)

JEROME POWELL: The economy is very strong. Unemployment is low. Wages are going up. The labor market is quite healthy. And inflation is all too high. So we're responsible. We're accountable for inflation. And we're going to use our tools to bring it down.

HORSLEY: Powell expects policymakers to raise rates by a quarter-point when they meet in a couple of weeks.

MARTINEZ: NPR's Scott Horsley. Scott, thanks.

HORSLEY: You're welcome.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

A Martínez
A Martínez is one of the hosts of Morning Edition and Up First. He came to NPR in 2021 and is based out of NPR West.
Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.