The U.S. economy added 379,000 jobs in February, beating 210,000 economists’ calculations, suggesting that one year into the pandemic, the labor market is finally showing signs of recovery.
In the first full monthly employment report under President Joe Biden, the unemployment rate dropped to 6.2 percent, from 6.3 percent in January, according to data released Friday by the Bureau of Labor Statistics.
“The ship is pointing in the right direction, and the additional stimulus coming from Congress must be the wind in its sails to get the economy back on track,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
The latest job report comes after a month of obstacles in the deployment of Covid-19 vaccines and icy weather that plunged Texas and large parts of the South into a deep freeze that froze oil drills, burst domestic plumbing and burst lives cost.
The January job report, which showed that only 49,000 jobs had been added, was revised upwards to 166,000 jobs on Friday.
Although the economy has clearly added jobs, it is a mask of the extent to which the labor market is still held back, and the number of people laid off for various reasons, from childcare obligations to health problems to lack of jobs in fields still affected by the pandemic is destroyed.
Although monthly job gains have increased and increased tremendously over the past year, labor market observers are concerned about an overarching pattern of job slowdown.
“The unemployment rate in itself is a bad description of the current labor market conditions,” said Andrew Stettner, a senior fellow at the Century Foundation.
Dan North, chief economist, North America at Euler Hermes, said that although nearly 60 percent of the jobs lost since the onset of the pandemic have recovered, the labor force participation rate shows a different story. “If you look at the participation rate, we’ve recovered about 41 percent of the amount lost, so it’s slower,” he said.
“If you look at the participation rate, we recovered about 41 percent of the loss.”
The discrepancy arises as a result of how the government calculates who has a job and who is actively looking for work. People are not caught by the official unemployment rate if they drop out of the workforce. “There is a lower participation rate because people are gone. That is the decoupling, “said North.
Federal Reserve Chairman Jerome Powell said last month that the country’s real unemployment rate was closer to 10 percent, and that the flag of labor market participation – which was 63.4 percent in February 2020, when unemployment was just 3.5 percent percent was – it reflects. “I think we’ll only see it again late in 2022,” said Bob Phillips, co-founder of Spectrum Management Group.
Mark Hamrick, senior economic analyst at Bankrate, said the very lucrative gains in labor participation before the pandemic were a function of long-term job growth. “The low unemployment rate in the early years of the economic recovery has led to more improvement in the prosperity of individuals in sectors and communities who have not participated before,” Hamrick said.
Many of these individuals now have an existential threat to their job prospects. Covid-19 in particular has dealt a severe blow to service industries that depend on person-to-person contact, such as travel, dining, entertainment and personal retail. The people who hold these positions, many of whom have low skills and low salaries, are already at a higher risk of falling behind economically, and they are now also running the chance of working in recovery.
While people who graduated from college lost proportionately fewer jobs and returned more of them, people who graduated from high school but never graduated from college were so lucky. ‘Lower paid workers, lower educated workers … they were left behind. They have skills that have not been developed, which is why we are all less wealthy, ”said Phillips.
Women, and especially young women, have lost ground – an observation by the Fed’s Powell as well as other officials as an obstacle that could hinder a broader economic rebound. “Women are staying home because of the school situation. This is a significant change that Covid has brought about and will probably stay with us for a while, I think – schools are just going slowly,” North said.
They will never compensate this time out of the workforce because they will never compensate the skills they would acquire by working.
‘One of the most important determinants of whether someone is currently in the workforce is whether children are in school. “As it seems to be resolved, it could lead to more individuals in the workforce,” Hamrick said. “And one would hope that a large number of the people could be re-employed.”
However, the clock is ticking for the workers who are still waiting for the opportunity to hire the staff. Another measure that frightens labor economists is the percentage of people classified as long-term unemployed – that is, people who are unemployed for 27 weeks or longer. These workers, who number about 4 million, now make up about 2 out of 5 of the unemployed in America.
The longer unemployment lasts, the more the duration becomes an obstacle in its own right, as employers can see that people’s skills have deteriorated. In a labor market with increased unemployment, hiring managers can then choose to select an applicant with a shorter time out of the workforce, which exacerbates the challenges for the long-term unemployed.
“When people are out of the job market, they just don’t keep up with the changes in work patterns and skills, and it becomes a bigger obstacle to get back in,” Phillips said.
“The longer it takes someone to become active in the job market … history shows that they will never compensate for this time, because they will never compensate for the lost skill sets they did not acquire through work.”