The US economic recovery on Friday showed new signs that the government’s data underlined the cruel damage to the labor market.
U.S. employers added 49,000 jobs in January, the Department of Labor said, hoping the new year would bring immediate relief. The private sector added just 6,000 jobs, barely enough to register against the millions of jobs lost during the pandemic.
The poor performance was counted amid a new effort in Washington to provide a large amount of aid to promote recovery, and the data will certainly strengthen the Democrats’ argument for a robust stimulus package.
“It is very clear that our economy is still in trouble,” President Biden said of the latest lecture on the labor market.
Mr Biden and the Democrats in Congress want to try to bolster the recovery, and they insist on providing $ 1.9 billion in aid. By approving the budget decisions in both chambers, Congress on Friday paved the way for the final delivery of the package on party list votes, if necessary, within a few weeks.
Some Republicans have argued that a smaller package would be sufficient, and others have said it is too early for another round of aid.
However, the report on Friday does not provide a job market, but proves that a metastasis crisis has taken place. The limited January gains follow a direct setback in December, when the economy lost 227,000 jobs, the first net decline since April and a larger decline than initially reported.
And although the December losses were concentrated in some pandemic exposed sectors, the weakness in January was extensive. Manufacturers, retailers, and transportation companies are all cutting jobs, indicating that economic damage is spreading.
The unemployment rate dropped to 6.3 percent, from 6.7 percent. But the decline comes in part because hundreds of thousands of people have left the workforce, a sign that the downturn could leave lasting scars. A year earlier, unemployment was 3.5 percent, a low of 50 years. The economy still has nearly 10 million fewer jobs than before the pandemic.
“There is very little to celebrate in this report,” said Julia Pollak, a labor economist at ZipRecruiter. “Almost every partner I was hoping would be disappointed in the right direction.”
In the return to growth, even if it was marginal, the economy still avoided a second consecutive month of job losses, a prospect that some economists feared, given the one-on-one blow of rising coronavirus cases and declining federal aid . Both of these forces are now reversing: Coronavirus cases are plaguing much of the country, and the $ 900 billion aid package passed by Congress in December is providing some relief to households and businesses.
Despite the gloomy start of the new year, many forecasters are indeed predicting that the economy will strengthen from here on out. In addition to the December stimulus, the vaccination, although slower than hoped, paves the way for wider reopening, even as coronavirus mutations around the world make the rollout more urgent.
“It’s a positive sign that we encountered the speed bumps and that the wheels did not come off the car completely,” says Nick Bunker, head of research at workplace Indeed.
For Hand & Stone, a national chain of massage parlors and facial spas, the winter revival of the pandemic was a setback after a long process of reopening. California and other states again imposed restrictions that completely shut down many spas and forced others to reduce services. And the loss of foot traffic has reduced gift card sales, usually a major source of business during the holidays.
“Reluctance to enter the economy and be in stores was a big negative,” said Todd Leff, the company’s CEO.
But with the gradual decline in Covid-19 cases reopening the spas, things started to bounce back. And Mr. Leff is optimistic about the widespread vaccination that eases customers’ fears.
“I do think a lot of the pent-up question is going to come back,” he said.
The concern is that the boost for many households and businesses may be too late.
The proportion of people looking for work or work remained depressed in January in terms of the level before the pandemic. This indicates more weakness in the labor market than is implied by the slowly declining unemployment rate, which only follows people who are actively applying for work. Continued closures and health care can keep potential job seekers on the sidelines.
Another concern is the growing number of Americans experiencing long-term unemployment – a growing plague that could threaten not only individual workers but also economic recovery as a whole.
More than four million people were out of work for more than six months in January, the standard definition of long-term unemployment. It was slightly higher from December and almost four times the number before the pandemic started.
The long-term unemployed now make up nearly 40 percent of all unemployed workers, the largest share since the aftermath of the 2007-9 recession. This does not include people who have stopped looking for work or who are unable to work due to childcare or other responsibilities.
Economic research has shown that when people are unemployed longer, it is more difficult to find work. This – together with businesses that have also had a long hibernation – can cause lasting economic damage.
“The longer a recession lasts, the more permanent scars there can be,” said Beth Ann Bovino, chief economist at S&P Global Ratings Services. “It takes time for those who are long-term unemployed, the businesses that have to reopen. It’s not like turning the light bulb on and off. ”
Jenna Fortino, 26, was fired from her job at travel website Expedia in October and moved out of her apartment in Washington, DC, and moved back in with her parents in New Jersey. She has no longer lost the jobs she applied for, but is optimistic that something will work out soon.
“Hopefully you know, in the next two weeks something will come out that I will go through,” she said. “I would not wish it on anyone. It was defeated. ”
The labor market has forces. Industries that are less dependent on workers’ personal interactions with colleagues and customers, such as professional services and finance, continued to add jobs in January.
That two-part recovery could exacerbate racial and gender differences exacerbated by the pandemic. Black and Spanish workers, and especially black and Hispanic women, have borne the brunt of job losses in low-wage sectors such as travel and dining, which may now be one of the last to fully reopen.
“This is affecting the most vulnerable groups excessively,” Kweilin Ellingrud, a senior partner at consulting firm McKinsey and co-author of a recent report, predicted that hard-working workers would slowly recover.
Nevertheless, there are signs of better times in the labor market. Employers are protectively optimistic that the economy will open up more fully as more Americans receive vaccinations and the pandemic subsides. Many people are still nervous about returning to work due to health and safety issues or childcare issues, but are willing to rejoin the workforce if conditions improve.
Sarah Hierholzer, 23, worked in an improvisational theater in Chicago until March, when she was all temporarily fired in response to the pandemic. According to her, she was told in June that the theater was closing permanently.
Me. Hierholzer said she has applied for more than a hundred jobs, including a job at the grocery store Trader Joe’s. But except for a brief stint at the Chicago Board of Elections this fall, she had no luck. Recently, however, she got a temporary job to import data at a title business.
“It’s definitely a relief to have a job,” she said, “even if it’s not necessarily a dream job.”
Jeanna Smialek contribution made.