U.S. Job Growth Surges in March
The U.S. economy saw an increase of 178,000 jobs in March, according to a Friday report from the U.S. Bureau of Labor Statistics. This figure far exceeded the expected 59,000 jobs and marked a significant bounce back from February’s unexpected decline of 133,000, which was influenced by a major medical strike.
However, these headline numbers don’t capture the full picture. Insights from the Dallas Fed and the Federal Reserve Board indicate that the breakeven rate for job growth—essentially, the number of new jobs needed each month to keep the unemployment rate steady—has dwindled to nearly zero.
The Dallas Fed’s revised analysis, presented on March 31 by economists Anton Cheremkin, Daniel Wilson, and Zhou Xiaoqing, attributes this drop to a notable reversal in illegal immigration trends. In the latter half of 2025, net illegal immigration averaged -55,000 monthly, totaling -548,000 for the year. This number is around 50% higher than previous estimates from the Congressional Budget Office. The breakeven rate fell to about 10,000 jobs by mid-2025 and dipped into negative territory in the latter half of the year, averaging around -3,000 jobs monthly from August to December.
A recent FEDS note by staff economists Seth Murray and Ivan Vidangos supports these findings through a different analytical approach. They suggest that due to historically low population growth and decreasing labor force participation, the need for new workers to stabilize unemployment could drop below 10,000 a month by 2026. They describe this scenario as “unprecedented in recent history,” even lower than during the pandemic.
The memo from the committee staff also raises concerns that the Bureau of Labor Statistics may be overestimating the growth of the population in 2026. Although the Census Bureau anticipates that net immigration will add roughly 320,000 individuals to the population this year, a more recent analysis by the Brookings Institution suggests that net immigration could actually range between -925,000 and 185,000.
Considering the midpoint of that range would result in a population growth of less than 0.2%, which might be overly optimistic even for these near-zero breakeven estimates.
One significant takeaway is that even with potential economic growth, the monthly jobs report could show negative numbers just as often as positive ones. In such cases, it’s not unusual for companies to eliminate about 100,000 positions monthly. When such reports come out, they shouldn’t be automatically interpreted as signs of a recession.
The facility survey offers some intriguing insights. Private payrolls saw an increase of 186,000. Following the end of the strike, 76,000 employees returned to work, contributing to a recovery in the healthcare sector. The construction industry added 26,000 jobs, and manufacturing grew by 15,000 positions, primarily in durable goods. Salary growth outstripped health care cost recovery, as indicated by the rise in the penetration index from 49.2 to 56.8. Meanwhile, federal payrolls continued their downward trend, decreasing by 18,000 jobs, which brings the overall reduction since the peak in October 2024 to a total of 355,000 jobs (11.8%). The unemployment rate also saw a slight decline, moving from 4.4% to 4.3%.
Wages increased by 0.2% last month and by 3.5% on a yearly basis, continuing to surpass inflation rates. Nevertheless, weekly average wages dropped slightly as the average working hours reduced from 34.3 to 34.2 hours. This indicates that while companies are hiring more workers, they are simultaneously cutting back on working hours—an approach that reflects both a tight labor market and cautious demand from employers.
