Popular Economics Weekly
The unemployment rate fell by 0.4 percentage point to 6.3 percent in January, while nonfarm payroll employment changed little (+49,000), the U.S. Bureau of Labor Statistics reported today. The US labor market continued to reflect the impact of the (COVID-19) pandemic, which means much more economic aid is needed to offset the damage.
The Calculated Risk red line in graph portrays the damage done by the pandemic in the 10th month of this recession vs. earlier recessions, with 10 million jobs still lost and almost 20 million receiving unemployment benefits of some kind.
In fact, BLS reports the jobs picture began to worsen in November and December. The change in total nonfarm payroll employment for November was revised down by 72,000, from +336,000 to +264,000, and the change for December was revised down by 87,000, from -140,000 to -227,000. With these revisions, employment in November and December combined was 159,000 lower than previously reported.
The report also showed where most of the damage was done and why unemployment benefits must be extended past March for those in the lower-income brackets. Leisure and hospitality lost 61,000 jobs in January due to the pandemic. In March and April of 2020, leisure and hospitality lost 8.2 million jobs, and then gained about 60 percent of those jobs back. However, leisure and hospitality lost jobs in December and January, and is now down 3.9 million jobs since February 2020.
But professional firms in tech, science and so forth added 93,000 employees last month to lead the way in hiring. And 23 percent of the employed “teleworked” from home, a sign of future job trends. These data refer to employed persons who teleworked or worked at home for pay at some point in the last 4 weeks specifically because of the pandemic, said the BLS.
Employment fell in almost every other part of the economy. Jobs in leisure and hospitality — restaurants, hotels, casinos, theaters and the like — dropped by 61,000 in January after a massive 536,000 decline in December.
States began to lift business restrictions last month as coronavirus cases began to recede again, but not enough to give a big boost to employment. Retailers shed 38,000 jobs, health-care providers cut 30,000 positions and firms in warehousing and transportation cut payrolls by 28,000.
Are we through the worst of this pandemic? The COVID Tracking Project (CTP) reports both COVID positive tests and hospitalizations are down sharply in January.
“The good news in COVID-19 data continued this week, as new cases, hospitalizations, and deaths all dropped,” said the CTP. “For the seven-day period running January 28 to February 3, weekly new cases were down more than 16 percent over the previous week, and dropped below one million for the first time since the week of November 5.
“This is still an astonishing number of new cases per week, but far better than the nearly 1.8 million cases reported on the week of January 14. Tests also declined nationally, but by less than 3 percent, nowhere near enough to explain the steep drop in cases,” reported CTP.
Part of the Biden rescue package being debated in congress is $70 billion for COVID-19 testing and a national vaccine program, and increasing the federal, per-week unemployment benefit to $400 while extending it through the end of September.
All of this aid is necessary and more, as I have reported, if we want the recovery everyone is hoping for.
Harlan Green © 2020
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
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