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U.S. employers add 315,000 jobs as more workers join labor force

Sept. 2, 2022 Updated Fri., Sept. 2, 2022 at 7:52 p.m.

Vanessa Wade pours a beer at Takoda Navy Yard in Washington, D.C., in July.  (Craig Hudson/Washington Post)
Vanessa Wade pours a beer at Takoda Navy Yard in Washington, D.C., in July. (Craig Hudson/Washington Post)
By Lauren Kaori Gurley Washington Post

The U.S. labor market added 315,000 jobs in August, hitting a 20-month streak in strong job growth that’s powering an economy through ominously high inflation.

The unemployment rate ticked up slightly to 3.7%, according to a monthly jobs report released by the Bureau of Labor Statistics on Friday, with 344,000 more people unemployed than the previous month.

The August jobs gains were the lowest monthly pickup so far this year, but the labor market remains an area of strength for the economy, especially as the Federal Reserve raises interest rates to rein in blistering inflation.

The biggest gains were in professional and business services, which added 68,000 jobs in August, shooting past its pre-pandemic numbers. The industry saw the strongest gains in computer systems design, management and technical consulting, and architectural and engineering services, while legal services lost 9,000 jobs.

Employment in health care rose by 48,000 jobs, with notable additions in physicians, hospitals, and nursing and residential care facilities. Retail trade added 44,000 jobs, and manufacturing continued to trend up by 22,000 jobs.

Employment in leisure and hospitality saw little change after average monthly job gains of 90,000 in the first seven months of 2022.

The industry still remains below its pre-pandemic levels by 7%.

The economy has more than recovered the 20 million jobs lost during the pandemic.

Meanwhile, other indicators, such as a decline in economic output and persistent higher prices for just about everything, suggest a less rosy picture, raising questions about how much longer the hot job market can last.

The mixed signals have led many economists to warn that workers will eventually face a weaker job market, especially if there is a recession.

Although inflation eased slightly while remaining high in July and workers have continued to see historic wage growth this summer, paychecks have not kept up with inflation, hitting low-income households the hardest.

Average hourly earnings increased by 10 cents for private sector workers in August, or by 0.3%, to $32.36 an hour.

Over the past year, wages have increased by 5.2%.

The labor force participation rate also ticked up by 0.3% in August up to 62.4%, a sign that more Americans are looking to return to work, with many finding jobs.

But that figure remains below its February 2020 levels, frustrating employers facing severe labor shortages.

“Broadly speaking, the economy is slowing even though the job market has been very hot,” said Daniel Zhao, lead economist at Glassdoor. “But the overall economy and job market can’t be out of sync for too long.

“I think the labor market still has gas left in the tank and clearly more than we expected a few months ago, but eventually it will have to fall back to earth.”

The economy added 528,000 jobs in July, more than doubling forecasters’ expectations and substantially reducing recession fears.

“Things are still very hot, but July’s report was more of a fluke than the start of an accelerator,” Zhao said.

Industries that are more sensitive to interest rate hikes, including construction, durable goods production, mortgages and temporary help services, will see a decline in jobs first if the labor market weakens, economists say.

“When we stop seeing growth in those industries, that’s when you think the first shoe is beginning to drop. It hasn’t yet,” said Erica Groshen, an economics adviser at Cornell University and the commissioner of the Bureau of Labor Statistics from 2013 to 2017.

The strength of the job market has emboldened the Fed to take aggressive action to fight inflation.

Speaking in Jackson Hole, Wyoming, last week, central bank Chair Jerome H. Powell said the Fed will not stop raising rates until inflation is more under control, though he expects that will probably soften the labor market.

Booming jobs creation has also meant fierce competition between employers for a limited labor supply.

There continue to be roughly two open jobs for every job seeker, according to the July job openings report, and workers continued to quit their jobs at an elevated rate in July, in a phenomenon dubbed the “Great Resignation.”

Craig Woodling, 39, quit his job delivering packages for an Amazon contractor in Orlando in August. His co-workers had been quitting “left and right,” he said, and his manager was disappointed when he gave his notice.

“It was mostly heat and the expectations of how much Amazon wanted us to deliver,” Woodling said.

He added that the number of packages he was delivering had surged to 400 a day, up from 220 during the pandemic. “I’m about 40, at this point, so it’s wearing my body out.”

Woodling said he felt comfortable quitting his $18-an-hour delivery job because of a labor market with plentiful opportunities.

Plus, his wife has a stable income. Now that he’s applying for jobs, he’s less certain that he’ll be able to quickly find another, particularly in the areas that he is looking: radio, his passion, or information technology.

“I thought it would be much easier to get a job once I quit, but that hasn’t been the case,” Woodling said. “Part of me wants to look for delivery jobs that I did before, but my wife keeps reminding me that you don’t want to get in that field again.”

The tight labor market, combined with inflation at 40-year highs, has also fostered an environment ripe for union activity, as workers struggling to pay for gas, food and housing have more power to make collective demands of employers facing widespread labor shortages.

The National Labor Relations Board has reported a 56% uptick in petitions for union elections in the first nine months of fiscal year 2022 compared with the prior year.

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