All right, I’m just going to go for it. All right. >> Welcome to the Q1 2026 edition of Labor Market Watch. I’m Peter Carr with Shaker Recruitment Marketing, a guy who geeks out on the first Friday of every month when the Labor Department releases its job data, which let’s just call it like it is, folks, it’s a straight-up cry for help. But with last week’s release of the March JOLTS numbers, we’re finally able to get a full picture of the overall labor market in Q1 of 2026. So, let’s get after it. We begin with jobs, jobs, jobs. Remember 2021? Companies were hiring like crazy and it had the highest average monthly jobs growth on record. We were adding over 600,000 jobs per month. Now, not so much. In 2025, job growth stalled to just under 15,000 a month. 15,000. But in Q1 2026, we saw a really big improvement with that average jumping to over 63,000 jobs added each month. So, for employers, this means the labor market is cooling but not collapsing. It’s still pretty resilient and healthy. But how we got to that healthy 63,000 monthly average was completely unhinged. January beat expectations with over 160,000 jobs added. February got totally crushed by losing 156,000 jobs. And March blew past forecasts with 185,000 jobs added. It was a complete roller coaster ride and not for the faint of heart, but mostly due to some temporary impacts like health care worker strikes and bad weather. The unemployment rate didn’t fluctuate as wildly and held steady around 4.3% to 4.4% over those same 3 months. Probably because those two numbers come from two different surveys, but also because according to the St. Louis Fed, the new break-even point where unemployment rate doesn’t change is at an economy adding between 30,000 and 80,000 per month, which is exactly where we were in Q1. Regardless, I think we can all agree that this volatility makes workforce planning harder than ever. And in related news, the overall share of working-aged Americans working or actively looking for work fell each month of the first quarter, meaning fewer people are even trying to participate in the workforce. It fell from 62.1% to well below pre-pandemic participation levels that were north of 63%. But there is some good news when you dig into the details. The participation rate for people in their prime working years, those are those aged 25 to 54, which I am so definitely without a doubt, of course, please don’t check, still in that category. That was at a near 25-year highs at 83.8% at the end of Q1, and it hit a 25-year high of 84. 84% in January 2026. So, this reinforces that even in a slower economy, you need to double down on retention more than ever, because replacing people is still expensive and annoying. And for those actually looking for work in Q1, what were those industries that were doing the actual hiring? Well, if you had healthcare on your bingo card, then you are a winner. Healthcare continued to lead the pack of overall hiring since the pandemic. We also saw strength in construction and professional and business services. The big losers were finance, tech, and local and federal government employees. For those working in Q1, wages grew faster than inflation, which technically was good news in Q1. But we all know what it’s like to fill up your tank or go to the grocery store. It’s kind of brutal out there right now. And with the latest inflation prints earlier this week, we’re seeing inflation accelerate. In fact, for the first time in 3 years, wages did not outpace inflation. We’ll be keeping a close eye on that for you throughout Q2. As I mentioned at the beginning, the March JOLTS report was just released last week, and we learned that job openings stayed basically flat. Quits are below pre-pandemic numbers. And while we’ve been hearing of more companies laying off lately, actual layoffs in Q1 rose just a little bit, and they’re at historically normal levels. So, employers are taking a bit of a breather, and employees are staying put, which helps with retention, but it also means fewer fresh candidates entering the market. It’s really a game of chicken that we’ll all just have to watch play out. It’s a classic low hire, low fire market. And speaking of layoffs, Challenger, Gray & Christmas recently reported that announced layoffs in Q1 were actually down 56% from a year ago. 2025 had over 1.2 million cuts overall, the highest since 2020. But even with all the recent layoff noise, we are seeing the pace of announcements slow down considerably from last year. So, again, the labor market isn’t collapsing, but it’s definitely sending mixed signals. That means caution is still the dominant mode. Most companies aren’t planning massive layoffs right now. They’re being more surgical, and most are citing AI as the main reason for the cuts. So, what’s the big takeaway from Q1? The labor market is slowing, but it’s not breaking. Hiring has cooled dramatically from the post-pandemic insanity. Workers are staying put. Job openings are stable but subdued, and employers are operating with one foot on the gas and the other hovering nervously over the brake pedal. So, the message is clear for employers. You need better workforce planning, stronger retention, and realistic expectations about productivity, compensation, and finding skilled talent. Because even in a cooler market, the best workers still have options. And the companies winning right now are the ones acting strategically instead of emotionally. So, the economy will still continue to be unpredictable. Economists will keep prognosticating, and we’ll keep on bringing you the data that matters most. That’s it for the Q1 edition of Labor Market Watch. Labor on, y’all. We’ll see you next quarter.
