Get All Access for $5/mo

Job Growth Slows Dramatically in March Economic reports released this week reveal a sharp slowdown in U.S. hiring and labor force participation.

By Cheryl Winokur Munk

Opinions expressed by Entrepreneur contributors are their own.

Yahoo Homes

Hiring slowed severely in March, according to today's jobs report released by the U.S. Bureau of Labor Statistics. Nonfarm payroll employment gained only 88,000 jobs, well below the average 169,000 new jobs added per month in the previous 12 months and the lowest gain since last June.

The March data shows that employment grew in professional and business services and health care, but declined sharply in retail, which lost 24,000 positions.

Meanwhile, the unemployment rate ticked down to 7.6 percent from 7.7 percent in February and 7.9 percent in January, on a seasonally adjusted basis. This dip, however, is not a positive sign. Nearly half a million people dropped out of the labor market altogether, and the labor force participation rate, a gauge of how many people are employed or looking for jobs, fell to 63.3 percent -- its lowest level since May 1979.

Related: Small Business to Washington: Reduce the Debt

The private sector shows a similar weakening in job growth. Payroll-processing firm ADP released a private-sector jobs report on Wednesday showing that small businesses added just 74,000 jobs in March, down from a revised 100,000 jobs in February. Companies with 19 or fewer employees added 44,000 jobs in March, while companies with between 20 and 49 employees added 30,000 workers, according to the report. Service jobs showed the strongest gains.

It's unclear whether the slowdown is a hiccup or a sign of things to come.

Mark Zandi, chief economist for Moody's Analytics, believes the job market will come under continued pressure in the coming months as the result of automatic federal budget cuts known as the sequester. While he doesn't think these cuts, the first of which began March 1, have made a significant impact on job growth to date, he believes they will in the next few months.

Related: Sequester Countdown: What's in Store for the SBA

Sequestration will reduce funding across a range of programs, from infrastructure to defense to small business lending. Without the sequestration, the Congressional Budget Office, a nonpartisan federal agency, estimates that 2013 GDP growth would have been about 0.6 percentage points faster and about 750,000 more full-time jobs would have been created or retained by the fourth quarter.

Health-care reform is another factor expected to weigh on job growth, particularly for small businesses. The Affordable Care Act, signed into law three years ago, mandates that employers with 50 or more workers offer health-insurance coverage to employees or face hefty fines. According to Zandi, there are already some signs that companies close to the 50-employee tipping point are not adding new positions or replacing workers who have left.

As it stands, health care is particularly expensive for small businesses. Small-business health insurance premiums have risen 113 percent over the last nine years, a growth rate of nearly 9 percent annually, according to data on the website of the Small Business Majority, a small-business advocacy group. What's more, the group reports that 72 percent of small-business owners in 16 states who currently provide employee health-care benefits are struggling to do so.

Related: White House to Delay Health-Care Marketplace Options for Small Businesses

Cheryl Winokur Munk is a freelance writer and editor in West Orange, NJ. She is a former reporter for Dow Jones Newswires and American Banker where she covered the financial services industry. She earned a B.S. in journalism from Boston University.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business News

Controversial Clothing Company Shein Quietly Files IPO in London

Shein is headquartered in Singapore, where it's been since 2021, though most of its operations, including factories, are in China.

Business News

Jack Dorsey Says It Will Soon Be 'Impossible to Tell' if Deepfakes Are Real: 'Like You're in a Simulation'

Dorsey said we will "not know what is real and what is fake" in the next five to 10 years.

Business News

Apple Is Working on Making Its $3,499 Vision Pro More Affordable — and Mainstream. Here's How.

Apple's product is at least three times more expensive than Meta's version.

Business News

50 Cent Once Sued Taco Bell for $4 Million. Here's How the Fast-Food Giant Got on the Rapper's Bad Side.

The brand suggested that 50 Cent change his name to match its "Why Pay More?" value menu promotion prices. The rapper was not amused.

Growing a Business

India is the Perfect Location for International Expansion. Here are 5 Things to Consider When Expanding to India

Entering the Indian market brought several discoveries about the business landscape there — some of them unexpected.

Thought Leaders

The 8 Taylor Swift Strategies Every Tech Leader Should Apply in 2024

From more progressive intellectual property management to breakthrough community engagement, here's what tech entrepreneurs can learn from Taylor Swift.