High-Quality Jobs Created in April Despite Monthly Job Creation Decreasing in the United States

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Over the past five years, the average number of jobs created on a monthly basis was approximately 207,000 in the United States. This puts into perspective the decrease experienced in April 2016 when job growth statistics reported an increase of 160,000 jobs. However, the unemployment rate remains unchanged at 5% nationally. While the retail industry lost 3,100 jobs, manufacturing held steady with minimal changes to existing workforces. The greatest loss in the private sector was experienced by the mining and logging industry with a drop of 8,000 net jobs with the direct cause attributed to the continued slump in oil prices. A decrease in labor needs across the oil and gas sector as well as related service industries has been seen throughout the past several months. Meanwhile, in the public sector, job growth within government agencies decreased by 11,000 positions nationwide.

Job expansion was largest in the professional and business services industries with an increase of 65,000. Followed by the education and health services industries with 44,000 jobs created. The leisure and hospitality and financial activities industries also experienced job creation but at 22,000 and 20000 jobs respectively. By the numbers, it is clear that workers with a higher level of skill are in demand. Hiring for skilled positions across most industries remained active, despite the decreases in the entry level and unskilled positions.

While the U.S. gross domestic product grew by a mere 0.5% on an annualized basis in the first quarter of this year, April’s jobs report is not nearly as bleak as it may seem. The US only needs to create roughly 80,000 jobs per month to adjust to meet population growth requirements. The drop in employment numbers with regards to the mining and logging industry could likely be attributed to the oil market and related industries to the oil and gas employers. Commodity prices around the globe have suffered significant challenges over these past six months. This translates to jobs lost throughout the oil and gas as well as mining and logging industries. Despite job losses posted this past month, across the board workers received a significant bump in wages with the expansion of 2.5% annually reported. Typically a 3% to 3.5% percent increase is typical of a healthy U.S. economy, but it is a remarkable improvement over March 2016 wage increase numbers. This number may also be a result of the increase in higher level paying jobs for skilled positions and a drop in entry-level positions hired over the past quarter.

While the need for talent in industries with more entry-level and low-skilled jobs appears to have seen a decrease this past quarter with losses in retail and minimal job growth in construction, wholesale trade and manufacturing this flattening could indicate other influencers within the US jobs market. Changing regulations with regards to minimum pay rate and paid sick leave are potentially causing employers to be more restrictive and selective when it comes to hiring full-time employees. Many of the industries that rely on minimum or near-minimum wage workers are poised to begin dialing back hiring to reduce increasing payroll costs as well and improve the efficiency of their existing labor force to maximize the production potential of their workers. This means more selective hiring as well as trimming of the existing workforce and consequently fewer net positions created within organizations across the nation.

As minimum wage climbs to $15 hourly in both New York and California, smaller businesses will struggle to maintain current profit margins and retain their current staffing numbers. Furthermore, the uncertainty regarding how the November Presidential elections will affect businesses (both large and small) may result in a shift in hiring strategies for the remainder of 2016. Typically the increase in revenue experienced by many industries (though mainly the leisure and hospitality industries) during the summer months leads to some seasonal hiring in retail as well as leisure and entertainment. This seasonal hiring coupled with an increase in fuel prices and cautious optimism throughout the oil and gas sector for improving oil prices and commodities trading could help to offset the lack of enthusiastic hiring during April in the months to come.