Falling coronavirus caseloads brought a flood of new jobs and new workers last month, signs that the pandemic’s vise grip on the economy may be loosening.
U.S. employers added 678,000 jobs in February, the Labor Department said Friday, continuing a streak of strong job growth that persisted even during the latest wave of coronavirus cases. The unemployment rate fell to 3.8 percent, its lowest level since the pandemic took hold.
Demand for workers has been strong for months. Now there are signs that constraints on the supply of workers may be easing as well. More than 300,000 people rejoined the labor force in February, a sign that improving public health conditions, more predictable school schedules and abundant job opportunities are drawing people back to the job market.
The share of people working from home or missing work because of illness both fell in February after rising along with coronavirus cases in January. Updated federal guidance suggesting that most Americans no longer need to wear masks or avoid crowded indoor spaces could pave the way for more companies to bring workers back to the office in coming weeks.
“We’re seeing employment levels very close to where we were before the pandemic,” said Daniel Zhao, an economist with the career site Glassdoor. “We are approaching a more normal labor market.”
President Biden struck a similar note in his State of the Union address this week, saying that because of vaccines, new treatments and falling caseloads, “Covid-19 need no longer control our lives.”
The U.S. economy has regained more than 90 percent of the 22 million jobs lost during the early weeks of the pandemic, a much faster rebound than after past recessions and than forecasters expected. Yet Mr. Biden has struggled to capitalize, in part because many voters are unhappy about high rates of inflation. Some Democrats have also criticized the administration for not doing enough to claim credit.
On Friday, Mr. Biden said the strong rebound in jobs was evidence that his policies, including the $1.9 trillion pandemic aid package passed early in his term, were working.
“Today’s news is a welcome reminder that we’re coming back stronger as a country and as people,” Mr. Biden said at a White House event highlighting the president’s “Made in America” efforts. He noted that before the aid plan passed, the Congressional Budget Office did not expect the unemployment rate to fall to 3.8 percent in the next decade.
The data released Friday was collected in mid-February, before the Russian invasion of Ukraine, which shook up global financial markets and caused a sharp increase in energy prices. Analysts say the United States is less vulnerable than Europe to the economic effects of the crisis, but they warn that a prolonged conflict will have global repercussions that are hard to predict.
So far, at least, the labor market recovery has overcome every obstacle. Job openings are near a record high. Layoffs are at a new low. And hiring has remained strong in the ebb and flow of successive waves of the pandemic — employers have added at least 400,000 jobs every month since May, the longest such streak on record.
“This is an economy that has learned to manage very well through uncertainty,” said Robert Rosener, senior U.S. economist with Morgan Stanley. “We’ve continually been surprised by the resilience of the U.S. labor market.”
Hannah Ashford spent most of the first two years of the pandemic trying to figure out how to keep Sweet Yield Studio, her Oklahoma City dance studio, from going out of business. But in December, she hit a milestone: Enrollment for the spring semester met and then surpassed its prepandemic level for the first time.
As a result, Ms. Ashford, 30, has begun thinking about the future. She is scoping out space to add a second studio and weighing hiring more teachers to staff it. On Friday, she made an offer to a graphic designer, who accepted the job.
“It does feel good to have some room within our business to consider some of those things for the future,” she said. “It feels like we are slowly finding that stability.”
Still, Ms. Ashford isn’t totally free from the pandemic’s aftershocks. She is paying an extra $1,000 a month in rent to make up for missed payments in 2020. And despite her success with the graphic designer, she has struggled to find workers: She has been trying to hire a receptionist for six weeks, and a candidate withdrew on Thursday, just hours before a scheduled interview.
“I was just a little defeated,” she said.
The limited supply of workers has been a major factor preventing an even faster economic rebound, and the problem isn’t likely to go away quickly, even if virus cases continue to fall. Parents who have stayed home with their children for two years may not rush back to work as soon as they can; people who retired early because of the pandemic may not return at all. And other factors, such as an aging population and declining rates of immigration, predate the pandemic.
Stiff competition for labor has led companies to raise wages — good news for workers, but a source of concern for policymakers at the Federal Reserve, who are trying to prevent a spiral of wage and price increases.
The February jobs data may offer some reassurance for Fed officials. The labor force grew, unemployment fell, and average hourly earnings were virtually unchanged from January, although they are up significantly over the past year, particularly for workers in low-wage industries.
Jerome H. Powell, the Fed chair, indicated this week that the central bank is poised to raise interest rates by a quarter-point this month, as it looks to make borrowing more expensive to try to cool off the economy. The data released Friday is unlikely to change that outlook.
“It’s good news — it doesn’t really change anything that Chair Powell was sort of prepositioning the Fed for the other day,” Charles L. Evans, president of the Federal Reserve Bank of Chicago, said on CNBC Friday.
For workers, the combination of rising wages and abundant job openings are presenting a rare moment of leverage. Americans have been quitting their jobs at the highest rate on record, in many cases to pursue higher pay or better working conditions.
The strong job market is also creating opportunities for people who are often among the last to benefit from an economic rebound. The unemployment rate for workers without high school diplomas fell to 4.3 percent in February, the lowest level on record. People with disabilities and, at least anecdotally, those with criminal records are also finding work. And jobless rates have also fallen sharply for Black and Hispanic Americans, although they remain substantially above the rates for white workers.
Job growth in February spanned virtually all major industries, including those like transportation and warehousing that have flourished in the pandemic, and those like restaurants and retail that took enormous losses and have been struggling to recover. The leisure and hospitality industry added 179,000 jobs in February, but it still employs 1.5 million fewer people than in February 2020.
Downtown businesses have been especially slow to recover. But as more workers return to the office, they could revive the coffee shops, salad shops and after-work bars that serve them, said Julia Pollak, chief economist with the career site ZipRecruiter.
“That will supercharge the recovery among downtown businesses,” she said. “The industries that have taken the longest to recover, I think it’s their turn now.”
Linea, a coffee roaster in San Francisco, used to derive much of its business from the city’s big technology companies, which bought coffee wholesale to brew for their workers on site. That business dried up almost completely at the beginning of the pandemic.
When companies began announcing return-to-office plans last fall, Linea started hiring roasters and adding hours to meet the anticipated demand. That proved premature: The Omicron wave led companies to push back their reopening plans.
But Andrew Barnett, one of Linea’s owners, said he doesn’t regret the hiring. In fact, he hired another roaster in February.
“I see that as making an investment in the future,” he said. “I believe that business will bounce back.”
But Linea’s business no longer relies as heavily as it once did on the whims of Big Tech. Its retail business thrived during the pandemic, as people working from home looked for an opportunity to get out of the house. Diversifying the business has made it more resilient during a period of uncertainty, Mr. Barnett said.
“For us, it means we just have to roll with everything to be able to pivot and change our business model,” he said. “If you don’t, you’re dead in the water.”
Jeanna Smialek, Talmon Joseph Smith and Michael D. Shear contributed reporting.