Job Market Shifts Affect Women Differently

The U.S. economy added higher-than-expected 275,000 jobs in February, but the unemployment rate ticked up to 3.9 percent, the highest level since January 2022, on the back of a jump in returning workers to the labor market.

Adult women saw their unemployment rate jump slightly to 3.5 percent, while adult men fell to 3.5 percent, according to data from the U.S. Bureau of Labor Statistics.

Adult white women saw their unemployment rate tick up to 3.2 percent from 2.9 percent in January, explained by a jump in their participation rate (returning workers), which rose to nearly 58 percent from 57.6 percent the previous month. Black women’s unemployment rate ticked down to 4.4 percent, the lowest since November 2021, while their participation rate jumped by a half-point to 63.4 percent.

The unemployment rate doesn’t necessarily suggest job losses. It captures the number of unemployed people as a percentage of the labor force. An increase in labor force participation can help tick up the unemployment rate.

The state of the labor market

The February job numbers showed that payrolls were 75,000 higher than economists forecast and above the monthly average gains of 230,000 over the last year in what analysts suggested was evidence of a resilient labor market. But hiring from December and January was revised down by a combined 167,000 jobs, suggesting that the labor market was slowing, even though hiring was still robust.

“We continue to see solid job growth and unemployment below 4 percent. Job growth even picked up between January and February given January’s sizable downward revision,” Kory Kantenga, a senior economist at LinkedIn, said in a note shared with Newsweek. “So the labor market conditions are keeping many of us who want to work employed.”

Wages accelerated at a slower pace last month compared to January. Average hourly earnings rose on a yearly basis by 4.3 percent, outpacing Consumer Price Index (CPI) inflation, which stood at 3.1 percent in January, a positive sign for Americans.

“Wage growth figure was also good news for workers, who saw 25 straight months of real wage declines in 2021 and 2022 when inflation skyrocketed but have now seen real wage growth return since May,” ZipRecruiter chief economist Julia Pollak said.

The job gains were widespread with hiring seen in health care, government, food and services, construction and transportation, according to the U.S. Bureau of Labor Statistics.

“Jobs gains remained broad-based in February with the private sector adding 223,000 jobs, the largest increase since May 2023,” EY senior economist Lydia Boussour said.

But the February employment readings pointed to “mixed signals from the labor market,” she added.

“Beneath the strong headline print, prior estimates of job growth in December and January were revised down by a cumulative 167,000 jobs, the unemployment rate rose to a two-year high of 3.9 percent and wage momentum cooled,” Boussour said.

What job numbers mean for borrowing costs

The U.S. economy and the labor market has been grappling with elevated interest rates instituted by the Federal Reserve to battle inflation. Price increases have cooled closer to the central bank’s 2 percent target but still a bit away from the goal, leading policymakers to keep borrowing costs at their highest in more than two years.

Economists suggest that the February jobs report shows the Fed was getting close to its goal of slowing the economy enough to help inflation get down to target.

“The February jobs report doesn’t look recessionary. But it does suggest the Fed is getting closer to mission accomplished, calming the hot job market that contributed to high inflation in 2022 and 2023,” said Bill Adams, chief economist at Comerica Bank. “The February jobs report increases confidence that the Fed will pivot to rate cuts in the second quarter of 2024.”

Some analysts said that the jobs rate will help contribute to policymakers slashing borrowing costs by the summer.

“Today’s payroll report coupled with downward revisions has the Fed funds futures market focused on a June rate cut,” said Quincy Krosby, chief global strategist for LPL Financial.

A cut in rates could have huge significance for the housing market, which has seen mortgage rates soar since the Fed began hiking rates in March 2022 in what was the most aggressive monetary policy tightening since the 1980s.

Housing economists said that a strong labor market was a positive for the housing market. Americans with jobs means that they are earning and building their ability to buy homes. But it could also mean that policymakers may keep rates elevated for longer as they try to get price increases to their target.

“The strength in the job market, along with an economy that is still growing at a moderate pace, are positives for the housing market, as it supports home purchase activity and helps borrowers to stay current on their mortgage payments,” said Joel Kan, Mortgage Bankers Association’s deputy chief economist.

“However, the labor market’s continued resiliency is one of several factors keeping mortgage rates from declining much further in the near term, as it increases the likelihood that the Fed will not rush to cut rates.”