The job market shrugged off surging cases of the coronavirus and the forecasts of economists as 467,000 jobs were added in January, the Labor Department reported on Thursday.
It was another performance that seemed at odds with expectations, which had ranged from anywhere from a gain of 175,000 to a loss of 400,000.
The unemployment rate, meanwhile, ticked up slightly to 4% from its 3.9% rate in December.
Gains were seen in hospitality, professional services, retail and transportation and warehousing.
“Fortunately, this jobs report exceeded expectations, suggesting that there has been some economic recovery following a poor performance in December,” said Steve Rick, chief economist at CUNA Mutual Group. “As supply chains begin flowing more freely in 2022, we expect the economy to grow 4%, double its 2% natural long-run growth rate but slower than the 5.7% set in 2021. That said, rising inflation, market turbulence and the persistent supply chain crisis may severely disrupt the economy in the coming months.”
Employment has increased by 19.1 million jobs since April 2020, when the country saw unemployment soar following the arrival of the coronavirus. It now stands just 1.9 million below its pre-pandemic level.
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Analysts had expected issues with the report, as the omicron variant was at its peak during the week when the department collects its monthly data.
While demand for labor remains robust, with 10.9 million jobs open as of December, there are questions as to how fast the labor pool will recover going forward, limiting how quickly employers can fill those positions.
“Labor supply is definitely the biggest question going forward,” says Tom Graff, co-head of fixed income and portfolio manager at Brown Advisory.” In the short term, what’s really clear is whoever was working in 2019 and is no longer working no longer needs that money.”
Erica Groshen, a former commissioner of labor and now senior economics adviser at the Cornell University School of Industrial and Labor Relations, says that the jobs recovery has seen several waves beginning with the rapid bounceback in mid-2020 and then fits and starts as variants of the coronavirus came and went.
“Now, jobs are being created rather than reinstated,” as happened when workers returned from furloughs and layoffs after the pandemic’s initial lockdowns.
Then there are the demographics changes, notably the higher level of baby boomer retirements during the pandemic. “The 50-plus (cohort), they were the part of the workforce where participation was growing,” Groshen adds.
The million-dollar question for employers remains how to hire more workers from a smaller talent pool,” says Andrew Hunter, co-founder and economist at job search engine Adzuna.
Diana Furchtgott-Roth, a former chief economist at the Labor Department and adjunct professor at George Washington University, says the labor market is still constrained by several factors: mothers who chose or had to stay home during the coronavirus pandemic because of school closings, declines in immigration, the fact that self-employed workers are not counted in the government’s survey of establishments and age discrimination that may be keeping older workers out of the workforce.
“School isn’t providing the child care it used to,” because of closings, staff shortages and other lasting effects of the pandemic. “That’s why I think some mothers won’t go back.”
And despite the strong number for January, there are still those for whom the jobs recovery has been slow.
Kate Bahn, director of labor market policy and interim chief economist at the Washington Center for Equitable Growth, notes that while whites and men have seen their unemployment rates recover from the effects of the pandemic, the recovery has not been as good for others.
The unemployment rate overall has fallen from 6.7% as of December 2020 to 3.9% a year later, but whites have seen a drop from 6.1% to 3.2%. Blacks, however, saw their unemployment rate rise in December to 7.1% from 6.5% a month earlier. A year ago, it was 10%.
“This whole crisis has been really bad for Black women in particular,” Bahn says. “Black women are still the outliers.”