The March Jobs Report Beat Expectations, But Read Past the Headline
But the details deserve careful attention before drawing any conclusions about where this market is heading.
The drop in unemployment wasn’t driven by more people finding work. The household survey, which is separate from the payroll count and used to calculate the unemployment rate, actually showed 64,000 fewer Americans employed in March. The labor force itself shrank by 396,000. Labor force participation slipped to 61.9%, down from 62.5% a year ago. When people stop looking for work, they stop being counted as unemployed. The unemployment rate improved in part because the denominator got smaller, not because conditions genuinely improved.
The number of discouraged workers, people who believe no jobs are available for them, rose 144,000 in March to 510,000. Marginally attached workers, those who want employment but have stopped actively searching, jumped 325,000 to 1.9 million. Employers are also cutting hours, and that pattern typically precedes headcount reductions. These are not signals of a strengthening labor market. They’re signals of one that’s quietly retreating at the edges.
On the education gap: workers with a bachelor’s degree or higher saw unemployment fall to 2.8%, while those without a high school diploma are now at 5.9%. That split is widening, and it reinforces what we’ve been seeing across multiple data sources this year: the market is weakening most where workers have the least flexibility to adapt.
By industry, the story hasn’t changed much. Healthcare added 76,000 jobs, but 35,000 of those were physicians’ office workers returning from a strike, so the organic gain is closer to 41,000. Construction added 26,000, continuing its solid stretch. Between those two sectors, you’d have a passable report. Most everything else was flat or negative. The federal government lost another 18,000 jobs in March. Since peaking in October 2024, federal employment is down 355,000, or 11.8%. That’s a deliberate reduction, not an economic signal, but the scale continues to grow. Financial activities shed 15,000.
On wages: average hourly earnings rose to $37.38, with year-over-year growth at 3.5%. The average workweek shrank to 34.2 hours, which means take-home pay isn’t stretching as far as the wage growth number would suggest. Revisions were essentially a wash; January was bumped up slightly, but February’s already-bad number was revised down an additional 41,000. Net of both, the picture is marginally worse than previously reported.
Small Businesses Are Still Struggling to Find Qualified Workers, and Pulling Back on Plans
The NFIB March Jobs Report was released yesterday, and its findings align with what the BLS data is suggesting below the surface. The Small Business Employment Index fell 1.9 points to 101.6, a meaningful single-month drop, even if the index remains above its historical average of 100.
52% of small business owners reported hiring or trying to hire in March, down two points from February. Of those actively hiring, 87% found few or no qualified applicants. 23% reported zero qualified applicants, up two points. Unfilled openings came in at 32%, down a point but still well above the historical average of 24%, and at the lowest level since the COVID recovery. The availability of qualified workers remains the central hiring challenge for small businesses, a theme that’s been consistent in this report for months.
The compensation data is where the picture gets more forward-looking and more concerning. A net 33% of owners reported raising compensation in March, down a point from February. But plans to raise compensation over the next three months fell four points to a net 18%, the lowest reading since July 2025. When small business owners stop planning to raise pay, it’s a signal that hiring activity is likely to slow further. Workers who feel their employer isn’t investing in them tend to disengage, and the data on worker wellbeing has already been pointing in that direction.
NFIB chief economist Bill Dunkelberg noted that while small businesses aren’t in crisis, economic conditions could change rapidly. That’s not a reassuring statement. It’s a hedge. The small business employment picture isn’t collapsing, but the direction of travel (lower hiring attempts, rising unfilled openings, declining compensation plans) isn’t pointing toward recovery either. If you’re a small business struggling to find qualified candidates, the challenge isn’t unique to you, but the solution often requires more than posting a job and waiting.
Staffing your team doesn’t have to be hard.
Reach out and see how we can help.
Frequently Asked Questions
The unemployment rate is calculated using the household survey, which showed 64,000 fewer Americans employed and a labor force that shrank by 396,000. When people stop looking for work, they’re no longer counted as unemployed. The rate improved largely because the pool of counted job-seekers got smaller, not because hiring meaningfully accelerated.
The average workweek fell to 34.2 hours in March. Even with 3.5% year-over-year wage growth, fewer hours mean total take-home pay isn’t growing as fast as the hourly rate alone would suggest. Declining hours also tend to precede headcount reductions; employers typically cut hours before cutting people.
Healthcare demand is driven by demographics, not economic cycles. An aging population requires more care regardless of what’s happening in the broader economy, creating structural demand that other sectors don’t have. That said, March’s 76,000 healthcare gain included 35,000 workers returning from a strike at physician offices, so the organic monthly gain was closer to 41,000.
The persistent skills gap, 87% of small businesses trying to hire found few or no qualified applicants, isn’t going to resolve on its own. Expanding where you recruit, revisiting compensation structures, and partnering with a recruiting professional are all concrete responses. Waiting for the right candidate to appear on their own is a strategy that’s not working for most.
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March 2026 BLS Jobs Report: 178,000 added & what the headline is hiding
Welcome back to Cornering the Job Market. The big story today is the jobs report that was released this morning, so let’s just get right to it. The U.S. economy added 178,000 jobs in March. That’s a big bounce back from February, which was a revised loss of 133,000. Yes, I said revised. I will talk about the revisions in just a minute. We’re so used to those at this point, it’s hardly news. The unemployment rate came in at 4.3%, which is slightly down from 4.4% the previous month. So slightly better trend there. And on the surface, this looks good, but once you dig in a little deeper, as seems to be the case constantly lately, not so much, the number of employed Americans actually fell by 64,000 in March, and the labor force shrank by 396,000.
And 488,000 more people moved out of the labor force entirely. Labor force participation slipped to 61.9%, which is down six-tenths of a point from a year ago when it was 62.5%. So how does unemployment go down when employment also goes down? People left the workforce. They stopped being counted. The unemployment rate improved in part because the denominator got smaller. The number of discouraged workers went up 144,000 in March to a total of 510,000, and the marginally attached jumped 325,000 to 1.9 million. Those are people who want work but have actively stopped looking. Now here’s a stat you probably won’t see reported anywhere else. Workers citing slack work or business conditions as the reason they’re part-time jumped 269,000 in March to a total of 3.1 million.
That means employers are cutting hours. And that is usually a precursor to cutting headcounts. So not a good sign at all seeing that. Workers with a bachelor’s degree or higher saw unemployment fall to 2.8%, while workers without a high school diploma went in the opposite direction. Unemployment for them is now 5.9%. And I’m sure it doesn’t feel like unemployment is trending in the right direction if you are on the job market right now, especially if you’re a younger worker, but this is what the data is telling us. Now on the industry side, healthcare continues to lead the way. Healthcare added 76,000 jobs, but there’s a caveat to that.2% to 37.38. Year-over-year wage growth is at 3.5%, but the average work week shrank to 34.2 hours. So take home pay isn’t stretching the way that that percentage would suggest.
Revisions, I said I’d talk about that. They’re basically a wash, although always concerning to see because it makes us wonder whether we can trust these numbers at all. January was bumped up 34,000 to 160,000 jobs added. But February, which was already a bad number, was revised down by an additional 41,000 to get us to that negative 133. And the net change from the two months is 7,000 fewer jobs than previously reported. That’s why I referred to that as a wash. So the headline number is going to get all the attention from this month because we added 178,000 jobs. I’m sure we’ll see tweets from the White House and messages being delivered by the president and those who work for him as this being a really positive thing. But don’t don’t be fooled by that. Even if those numbers are real, we have real problems. The labor force is shrinking and hours are getting cut and discouraged workers are increasing. But I I I just don’t feel good about this report at all. I mean look, it was it was an improvement of what was expected.
Okay, we’ll take that when again if we expect these numbers to hold. I don’t. I I don’t count the month until I see the next month and find out how it was revised. And in some cases, we have to wait two months or more. So look, feel how you want about this number. I will just take it as just kind of more of the same, which is really my description of the job market for over six months now. We’re just not seeing any movement. Um, and that’s what this this report feels like to me.
NFIB March Jobs Report: Employment index falls, compensation plans hit lowest since July 2025
So let’s move on to the next story. And this is about the small businesses. The NFIB released its March Jobs report yesterday, and the numbers confirm what the BLS data is suggesting. The small business employment index fell 1.9 points to 101.6. That’s a meaningful single month drop. 52% of small business owners reported hiring or trying to hire in March, which is down two points from February. So that’s a trend in the wrong direction. Of those trying to hire, 87% reported few or no qualified applicants, and 23% reported zero qualified applicants, which is up. I have to say it. I say it every every month when I talk about this report.
If you’re having a difficult time hiring, you have to look internally first. Are you not paying enough? Are you not going about it the right way? Recruiting and hiring is not easy. That’s why in many cases these small businesses need to turn to a professional because they’re probably not very good at it. So reach out to me. Maybe my company can help you, but I’d be happy to tell you how to find a great recruiting and staffing company to partner with because hiring should not be that challenging, certainly not in this market. Uh, but moving on, I’ll get off that soapbox for now. Unfilled job openings in this report came in at 32%, which is down a point, but still above the historical average of 24%. The NFIB noted that openings are now at their lowest reading since the recovery from the COVID recession.
So hiring’s definitely going in the wrong direction there. Um the compensation date is where this report gets a little more interesting. A net 33% of owners reported raising compensation in March, which is down a point, but plans to raise compensation in the next three months dropped four points to a net 18%. That’s the lowest reading since July 2025. I’ll close on this with a quote directly from the NFIB. They wrote the economy is in okay shape, but a downturn is not out of the question. Stay tuned, things could change rapidly. That’s a great way to close the week. Stay tuned. We’ll see what changes in the near future. Hopefully, things for the better. But I’m not betting on that right now. We’re gonna have to wait and see. Thank you for listening.
Fun fact: Procrastination is an emotional regulation problem
Before we go, here’s your fun fact procrastination is often an emotional regulation problem, not a time management one. Oh man. I wish I had a way to solve procrastination. I don’t. Hopefully you do, and it’s not a problem in your life, but certainly is for mine and has been for a very, very long time. So that is it. Really it for today. I will say goodbye now. Have a great weekend. Please like, subscribe, share with anyone who you think might be interested, and I will very much look forward to talking to you next week.
