5 Takeaways from the April Jobs Report

By: Jomayra Herrera

On Friday, I had the opportunity to join Ed Ludlow on Bloomberg Technology to discuss the April Jobs Report. You can see the segment here. We discussed the sectors driving most of the growth in the economy, the state of the labor market for tech, and the impact AI will have on the workforce. 

I thought it would be worth sharing 5 important labor market takeaways we didn’t get to discuss during the segment. 

• The labor market remains healthy, but is starting to show signs of a much awaited cool down. 

  • The labor market added 175K new jobs in the month of April, lower than initial estimates of 240K indicating a much awaited slow down in growth. 

  • Stock futures surged in response to this, as the market hopes this gives the Fed the signs they need to cut rates in the fall.

  • Unemployment ticked up slightly to 3.9% marking the 27th consecutive month of sub 4% unemployment. 

  • While job growth was slower than expected, the labor market in aggregate still is healthy with 1.32 job openings for every unemployed person. This is down from the peak of 2.03 in March 2022 but higher than it ever was before the pandemic.  

  • While wages grew only 0.2% in April, wages increased an overall 1.2% in Q1 of 2024 (higher than the 1% that was initially expected). Labor productivity is up 2.9% YoY.

  • All that said, the number of people voluntarily quitting their jobs fell by 198K, signaling less confidence among job hunters. 

• While the labor market seems robust, it is a tale of two cities depending on the sector a worker is in. 

  • Much of the job growth over the last 12 months has been driven by a few key industries - over half of the growth is driven by healthcare and social assistance and the remainder is largely made up of government, transportation and warehouse, retail, construction, and education. We have experienced this large demand in our portfolio with companies like Stepful (training for the allied healthcare workforce) and WorkWhile (a worker-first labor marketplace for the hourly workforce) surging in growth.

  • This stands in stark contrast to the experience of the “knowledge economy” worker, who has had a tougher time finding employment in this economy as tech companies have corrected after over-hiring during the bull market. Tech related job openings are down 25% to pre-pandemic levels. Of the 47 sectors that Indeed tracks, 83% had job postings above pre-pandemic levels. The five sectors with the largest decreases were software development, information design & documentation, mathematics, marketing and media, and communications. 

• The tech sector is starting to show signs of stabilizing, but time will tell on when and how we will start to see job growth rebound. 

  • There were 57K layoffs across the tech sector in Q1 2024, which was lower than the 167K layoffs in Q1 2023 indicating some stabilization happening across the sector. Most layoffs in 2024 were driven by transportation, retail, consumer, and hardware. 

  

  • Q1 earnings for the major tech companies were fairly positive and beat revenue estimates, largely driven by AI tailwinds. Companies put a higher premium on improving operational efficiencies, with companies like Meta and Amazon doubling and tripling operating profit respectively.

  • While demand for technical skills remains robust, especially for skills related to AI, cloud computing, and cybersecurity, there are questions about what demand the market should expect for non-technical roles (e.g. marketing, operations, finance, and human resources) given investment in internal automation. The top projected growth occupations in tech for 2024 are data scientists and data analysts, cybersecurity analysts and engineers, software developers and engineers, and software QA and testers.  

• Immigration is one of the most important factors in helping to maintain a robust labor market while the Fed has aggressively attempted to curb inflation. 

  • Immigration increased the labor supply by about 80,000 a month last year and Goldman Sachs expects it will boost supply by about 50,000 a month in 2024. 

  • The Brookings Institution estimated that immigration would allow 160,000 to 200,000 jobs a month to be added in 2024 without increasing inflation. 

  • The labor force participation rate for foreign-born workers increased to 66% in April.

  • Immigrants are largely taking positions in agriculture, construction, technology, and healthcare, which are fields where labor supply has been constrained. 

  • The Congressional Budget office estimates that the influx of immigrant workers will increase U.S. output and grow GDP over the next decade by $7 trillion.

• While the labor market seems robust, the underlying consumer may be in trouble. 

  • Delinquency rates on credit cards and auto loans are rising past their pre-pandemic levels. On car loans the increase is most acute for low-income areas. 

  • While consumer spending remains strong, the personal saving rate is down to 3.2%, the lowest since 2022. 

  • Consumer confidence fell for the third straight month in April, citing concerns around the rising cost of food and gas as well as global politics. As a reminder, the cost of groceries has increased 25% over the last four years.

  • The gap between home prices and US wages is widening, making it more difficult for the average American to partake in home ownership. 

  

  • The Ludwig Institute for Shared Economic Prosperity (LISEP) creates its own proprietary True Rate of Unemployment, which measures the percentage of workers who are looking for full-time jobs that pay a living wage but cannot find one. This differs from BLS measures, because BLS excludes people who might be earning only a few dollars a week (LISEP counts someone as unemployed if they make less than $25K a year) and BLS excludes anyone who has stopped looking for work because they are discouraged or lack child care. LISEP found that the true rate of unemployment is actually 24.2% and there is high regional diversity in that number.

I hope this is interesting and I’m considering making this a monthly series! I love nerding out on the labor market, so if you ever want to chat about trends or if you are building a solution to help solve some of our biggest labor challenges, please reach out to me at jomayra@reachcapital.com. 

We have a growing workforce portfolio at Reach, including companies like Handshake, Stepful, WorkWhile, Aprende, CoderHouse, Springboard, Hopps, Take2, and more. We also have a group of amazing senior HR and L&Dadvisors who help us to stay close to the ground and support our portfolio companies.