America’s unemployment rate fell last month to its lowest level since the pandemic, even as employers appear to have slowed down on hiring – a mixed picture pointing to a resilient economy that is pushing more people to work.
The government said Friday that businesses and other employers added just 210,000 jobs in November, the weakest monthly growth in nearly a year and less than half of the 546,000 jobs increase in October.
But other data from the Labor Department report painted a brighter picture. The unemployment rate fell from 4.6% to 4.2% as 1.1 million Americans said they found work last month.
The U.S. economy remains under threat from surging inflation, labor and material shortages, and the potential impact of the omicronic variant of the coronavirus. But for now, Americans are spending freely, and the economy is projected to grow at 7% annually in the last three months of the year, a sharp rebound from 2.1% in the previous quarter, when the delta option held back growth. …
Employers in some industries, such as restaurants, bars and hotels, refused hiring in November. In contrast, job growth has remained robust in areas such as transportation and warehousing, which benefit from the growth of online commerce.
The drop in the unemployment rate was especially encouraging as it coincided with the influx of half a million job seekers into the labor market, most of whom quickly found work. It usually takes many of these people time to find work, and until they find a job, they will be considered unemployed. The influx of new job seekers, if continued, will help alleviate the labor shortage that has plagued many employers since the economy began to recover from the pandemic.
“This is good news for job seekers and workers, as well as businesses,” said Julia Pollack, chief economist at online job site ZipRecruiter. “It seems that supply constraints are easing slightly due to low unemployment and high wage growth,” two factors that often motivate people to look for work.
The November report reflects the discrepancy in the two polls the government conducts each month. The unemployment rate is calculated based on a household survey. Last month, this study found that an additional 1.1 million people reported being employed. In a separate survey of employers, called the wage survey, only 210,000 additional jobs were found.
While the results of the two surveys are usually the same over the long term, they can differ dramatically in any given month. For November, economists noted that the strong increase in employment in the household survey brought that figure in line with the larger increase in the survey of wages in previous months.
The hiring growth in the wage survey has also been revised substantially in recent months, with some economists suggesting that this is likely to repeat itself in the coming months.
“It seems to me that the household valuation is closer to the truth about what is happening in the labor market and … we should expect a significant upward revision of the November data next month,” said Joseph Brusuelas, economist at RSM, a tax and consulting firm. … …
The Household Survey also covers the self-employed and the giants, whose ranks have grown steadily since the pandemic, unlike the wage survey. Some economists attribute part of the country’s labor shortage to an increase in the number of people who have recently started working for themselves.
Among them is Daniel Nolan from Raleigh, North Carolina. Like millions of other Americans, 36-year-old Nolan has turned his life and work upside down due to COVID-19. His 9-year-old son attended a virtual school at the start of the pandemic. And his cancer-sick father-in-law moved in with his family, prompting Nolan to quit his job as a software engineer at a private equity firm.
Nolan had expected this period to last only a few months. But when he started looking for work again, job offers were not what he was looking for. Therefore, in August, he decided to act independently.
So far, Nolan said, he is making about the same income as before. He plans to continue consulting for at least two more years – and may never return to corporate work again.
“I can earn at least as much as I did in my previous job and still have the flexibility to be a consultant,” he said.
Friday’s report showed that the number of unemployed Americans fell to 6.9 million in November, down from 5.7 million before the pandemic began. And average wages, which are rising as employers try to attract or retain workers, are up 4.8% from a year ago.
For several months, employers have been struggling with a shortage of workers, because many people who have lost their jobs as a result of the pandemic, for various reasons, did not return to work. But in the past month about 600,000 people left in search of work and were generally recruited quickly. The government classifies people as unemployed only if they are actively looking for work.
As a result, the proportion of Americans in the workforce rose from 61.6% to 61.8%, the first significant increase since April. If this long-awaited development continues, it could indicate stronger job growth in the future.
Despite the fact that the unemployment rate has been steadily declining this year, the proportion of Americans working or looking for work has remained practically unchanged, at least until this month. A shortage of jobseekers usually limits hiring and forces companies to pay more to attract and retain employees. Higher wages can help support spending and growth. But it can also contribute to inflation if businesses raise prices to offset higher labor costs, which they often do.
Whether the growth in job seekers will continue is a critical question for the Federal Reserve. If the share of people in the workforce does not increase much, it will mean that the Fed is moving closer to its goal of maximum employment.
With inflation peaking in three decades and well above the Fed’s annual 2% target, fulfilling its hiring mandate will increase pressure on Chairman Jerome Powell to raise interest rates sooner rather than later. This would make loans more expensive for many individuals and businesses.
President Joe Biden on Friday drew attention to the decline in unemployment, which he called “incredible progress.” However, the slowdown in job growth, if it persists, will be a problem for
Biden, who has received poor marks in several opinion polls for how he managed the economy.
While most indicators show the economy is continuing to recover, White House aides have privately expressed frustration that the president has not earned recognition for this improvement and is instead criticized for the spike in inflation and gas prices that has burdened Americans in recent months.
A government survey of businesses showed that some employers were more cautious about hiring in the past month. Restaurants, bars and hotels created just 23,000 jobs, up from 170,000 in October. This could reflect the impact of the surge in COVID-19 cases last month and the decline in outdoor dining.
Retailers are cutting 20,000 jobs, indicating that holiday recruitment has not been as strong as in previous years. But shipping and warehouse companies added 50,000 items, indicating that online retailers and shippers are looking forward to healthy online shopping.
Jeff Crivelo, CEO of BBQ Holdings based in Minnetonka, which owns about 300 restaurants, said it has become a little easier for him to hire employees in recent months. None of his restaurants are closing ahead of time due to staff shortages. But it’s still a struggle. The company hired over 300 people in November but still has about 500 open positions.
“The pandemic,” Crivelo said, “has brought about a dramatic shift in consumer behavior, the demand and desires of the workforce.”
His company has raised average hourly wages by 15% since the outbreak of the pandemic, but is competing with new opportunities many restaurant workers have, including higher-paying jobs in warehouses or in trucks. Many young workers find jobs in the cannabis industry or gaming, or even make money by building followers on social media, Crivelo said.
The employment outlook for the coming months has become dimmer with the introduction of the omicron variant. Little is definitively known about the omicron, and mass plant shutdowns are considered unlikely. However, omicron could discourage some Americans from traveling, shopping and dining in the coming months and potentially slowing the economy.