Last month, U.S. hiring grew at the fastest pace in more than two years, but weak labor-force participation and stagnant wage-growth are still holding back the recovery.
The U.S. economy added 288,000 jobs in April, the Labor Department said Friday. The number beat economists’ predictions, and signaled an end to the winter slump.
Unemployment fell to 6.3% from 6.7% in March.
The numbers helped curb fears that a downward trend was emerging in the job market, economists say.
“The good news is the recovery continues,” said economist Justin Wolfers of the Brookings Institute. “If you had been worried that the slow job growth through the winter was part of a cyclical downtown, I think we’re out of the woods.”
The rebound in hiring was due, in part, to pent-up demand following a sluggish winter. Employers made up for hiring that otherwise would have happened during January and February.
Upward revisions for February and March showed that 36,000 more jobs were added than previously thought. That also makes the slowdown over the winter look less dramatic.
Still, economists say the report delivered a mixed outlook on the job recovery. It showed the economy is picking up, but raised concerns over labor participation and wage-growth.
“A thousand miles up, it looked good,” said Beata Caranci, deputy chief economist at TD Bank Group. “It doesn’t look as good if you look at the labor force drop and the slow wage growth that we continue to see.”
The labor force plummeted to a 35-year low in April, as 806,000 people dropped out of the workforce. The rate fell to 62.8%, down from 63.2% in March.
The drop in the labor force contributed to the low unemployment rate last month. But economists say it’s unclear whether the decrease in the labor force was the result of changing demographics or discouraged workers.
“Certainly the participation rates of younger folks, we’re talking even 30 and younger, has been weak,” said Caranci. “There’s something more going on than the demographics.”
Even college graduates, who have the highest employment ratio in the country, are struggling to find jobs. Some are leaving the labor force to go back to school; while others are accepting positions they are overqualified for.
Katy Willow, 25, has been looking for a full-time job since she finished school in 2011. Recently, she discovered her college education is hurting her job search more than it helps.
The Penn State graduate was turned down for an assistant activities coordinator position at ManorCare, a nursing center, after a credit check revealed she was behind on her student loans. Willow has since put her job search on hold.
“I worry that I won’t ever be able to get a job with benefits, a big kid job, until I pay down these student loans,” said Willow, who left a restaurant job in March. “And that basically means I’m going to be stuck bartending again.”
Graduates, like Willow, are entering the labor market to find their prospects are slim for landing a job that pays well enough manage their debt loads.
Slow wage growth is part of the problem. After eight months of growth, wages stood still last month at an average hourly rate of $20.50 in the private sector.
Long-term unemployment is another cause for concern. At 2.2% economists say the long-term rate is still twice as high as it should be at the end of a recession.
“We need to pick up the pace of the recovery,” said Tom Perez, the U.S. Secretary of Labor. “We still have way to many people who are suffering.”
For some long-term unemployed, the job market looks grim.
Nydia Valdes, 49, has been unemployed for almost two years. She hasn’t found work since her temporary finance job at the Brooklyn Public Library ended in 2012. With 24 years of finance experience and an MBA, Valdes was told she’s overqualified for most of the jobs she has applied to. It’s been even harder transitioning into a new field.
“I get worried that it has been a while and no one has called,” said Valdes. “No one’s interested in hiring me for the things that I think I’m qualified for. I can’t even break into something new, because they seem to want a background in that field. ”
Valdes has been living on her savings, while volunteering and taking courses. Keeping busy is how she stays motivated in her job search.
“It keeps me from obsessing about the fact that I don’t have work right now,” said Valdes. “Those things keep me out of the house and going. And that’s what I’m trying to do, keep going.”