Even though jobs decreased by 455,000 in April, the job market is still roaring, with 11.4 million job openings last month.
“You're really talking about a small, small drop back from still really stellar levels," Bank of America Institute Senior Economist David Tinsley recently told Yahoo Finance Live (video above). "So I think 'hot' would summarize it pretty well."
He noted that the bank’s customers’ incomes increased by 9.2% by April. That’s higher than the rate of inflation at 8.4%. He also mentioned which industries are adding jobs in this tight labor market.
“I think what's happening at the moment is that you've got this rotation back into the service sector and also, in a sense, functions that support that service sector," Tinsley said. "And you've seen some of the jobs growth continuing apace really in those areas, but also in things like transportation.”
He also spoke about how low-income households that are often left out of economic booms are benefiting from increased raises because their wages have risen 12% as well as others are seeing bigger paychecks.
“If you're a millennial and you're changing jobs, so by nature you would tend to be less well paid at the start, of course, as well, you might get a 20% raise. So you may have got a 20% raise. So that part of the high turnover end of the labor market really is delivering, or has been to date, delivering big pay raises,” Tinsley said.
While the job market is hot now and workers can demand higher wages now, Tinsley said he believes that if unemployment rises above its current low 3.6% rate later in the year, workers may lose their leverage.
“I think if the unemployment rate does start to soften up a bit, then I guess some of these pay demands may decelerate into the back end of this year,” Tinsley said.
Despite inflation and the Federal Reserve raising interest rates, Tinsley is optimistic that the job market won’t slow down anytime soon.
“By all accounts, the labor market is still really strong," Tinsley said.
Ella Vincent is a personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago.
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