The Bureau of Labor Statistics issued its January jobs report, the first one in 2021, and it shows a labor market that continues to be weak.
Though the official unemployment rate dropped from 6.7% to 6.3%, this change was driven more by a drop in the labor force participation rate than by workers getting new jobs.
A few more notable findings appear in the household data. Labor force participation has dropped again for women – likely reflecting their difficulties juggling child care (for those not at school) and employment.
About 40 percent of the unemployed have now been out of work for over 6 months – the frequently-used definition of long-term unemployment, at which point it becomes harder to return to work. Also, over a third of the unemployed – 3.5 million – are now permanent job losers, who often face great hardships finding new jobs.
The closely watched payroll jobs number rose by only 49,000. Leisure and hospitality jobs dropped by 61,000 and retail by 38,000. These drops clearly reflect the dampening effects of the worsening pandemic on shopping and restaurant-going. These losses were offset by a large increase in temp employment – 81,000 – plus increases in education (34,000) and government (43,000) as schools reopen and government begins recovering from its large employment losses in 2020.
A few other notable changes in payroll jobs: both durable manufacturing and transportation/warehousing jobs declined, by 17,000 and 28,000 respectively. These are important sectors that deliver well-paying jobs for those without college degrees. Employment rose in professional and technical services, where tele-commuting is more easily done.
The jobs market will not begin a sustained and broad-based recovery until the pandemic is brought under control – hopefully by much more widespread vaccinations in the spring. Another round of stimulus relief should also help. And policymakers must pay attention to the need for child care assistance and paid family leave, to help female workers remain the labor market, as well as new job training funding to help those permanently out of work.