By Christophe Decker
The first U.S. jobs report for 2022 showed continued, albeit lackluster, growth. But perhaps more important for the coming economic year are two factors behind the overall unemployment rate: a stagnant labor pool and the impact of omicron.
First of all, the good news. The economy created jobs in December, 199,000 of them, with gains in most sectors. This was less than the 440,000 job increase that some economists were expecting. Still, the gains are an indication of a reasonably healthy economy.
And the employment figures for October and November have been revised upward by the Bureau of Labor Statistics. Meanwhile, gains have been seen in a number of key areas. The leisure and hospitality sector was on the rise, as expected given recent trends, as were business services and manufacturing.
Construction is also on the rise and should continue to gain in the months to come – if it can find the workers.
The stagnant labor market
The unemployment rate fell to 3.9% – a new low in the era of the pandemic. This is good, to a certain extent. People who want jobs find them.
The problem is, employers are struggling to find workers in a somewhat stagnant labor market.
The number of people in the labor market increased slightly in December, but not by much – only around 168,000. And with vacancies exceeding this small increase in the labor market, there remains a significant risk that workers’ wages will fall. are starting to grow too quickly for the economy.
While this is great for workers, it is a concern for those trying to curb rising commodity prices. Higher wages in the hands of workers mean more money to spend, which usually pushes up the prices of goods.
The latest report shows that wages are on the rise, hours worked remain constant and the participation rate has remained unchanged. Even the number of people who are inactive but want a job has changed little. It’s really a sellers market for work right now. Strikes, wage pressure and more flexible work environments could become the new normal.
Separate data for November, released on January 4, 2021 by the Bureau of Labor Statistics, provide further evidence of a drying up of the labor market. There were 6.9 million hires that month, but 10.6 million vacancies – a clear imbalance. Meanwhile, the share of workers leaving their jobs voluntarily has remained high.
It appears that many Americans who lost their jobs in 2020 have taken early retirement or are still slow to re-enter the workforce.
And those who are reluctant to return to the office or factory are unlikely to be encouraged by the problem that is not yet reflected in the employment data: omicron.
The coming slowdown
The latest jobs report does not really reflect the effect of omicron on the labor market. Monthly job data is typically collected in the middle of the month – before the highly contagious variant of COVID-19 really takes hold in the United States
But if the United States doesn’t see the number of omicron cases peaking soon, Americans are likely to see a real slowdown in hiring. With more and more workers falling ill and unable to work, managers of retail stores, as well as bars and restaurants, may well be forced to cut hours of operation, reducing incomes and thus slowing growth. .
We can already see it with airlines, which have been forced to cancel flights. The real sectors at risk here are the leisure and hospitality and retail sectors – two industries that have rebounded quite well lately.
This may all sound a bit pessimistic given that the December jobs report showed gains. Growth is growth – it’s just that the risks to the economy are pretty high right now.
About this column
The author: Christopher Decker is professor of economics at the University of Nebraska Omaha.
This article is republished from The Conversation under a Creative Commons license. Read the original article.