Hiring slowed sharply in November, even before omicron, with 210,000 jobs added

Dec 3, 2021
Originally published on December 3, 2021 6:13 pm

Updated December 3, 2021 at 12:02 PM ET

Hiring slowed dramatically last month as COVID-19 cases rose, even before the arrival of a new and and even more worrisome coronavirus variant, which could put another speed bump on the road to labor market recovery.

Employers added just 210,000 jobs in November, according to a monthly snapshot from the Labor Department. Job growth appeared to lose momentum after stronger hiring in September and October. Hiring figures for those months were revised upwards.

However, a separate survey used to calculate the unemployment rate paints a different picture. It shows more than half a million people rejoining the workforce last month, while over a million found jobs. The unemployment rate fell sharply to 4.2%, from 4.6% in October.

"The improvement in the unemployment rate is really quite stunning," said Cecelia Rouse, who leads President Biden's Council of Economic Advisers. "It's important to note that we saw improvements in the unemployment rates for Blacks and Hispanics, for Asians and for men and for women. So that was broadly shared. This suggests it's a labor market where people are coming back and where they're finding jobs."

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The mixed signals show just how unpredictable the labor market is in the pandemic economy. And the new variant adds to that uncertainty.

Health experts don't yet know how contagious the omicron strain is or how effective vaccines will be against it. But the delta wave over the summer illustrates how a rise in infections can reduce both demand for workers and the number of people willing to work.

"We saw in a very real way a slowdown in hiring as a result of the delta variant," said Nela Richardson, chief economist for the payroll processing company ADP. "There were fewer people going to restaurants. Fewer people traveling. And that had an impact on hiring. It likely had an impact on fewer people deciding to come back into the labor market."

So far the U.S. has recovered about 82% of the jobs lost during the pandemic. But 2.4 million others who left the workforce when the coronavirus struck have not yet returned. It's not clear when — or even if — they will.

"We all thought there would be a significant increase in labor supply and it hasn't happened. So you ask, 'Why?' " Federal Reserve Chairman Jerome Powell told a Senate committee this week. "There's tremendous uncertainty around that, but a big part of it is clearly linked to the ongoing pandemic."

Powell said he doesn't expect the omicron variant to do anywhere near as much damage to the job market as the first wave of the pandemic, in the spring of 2020. But it could drag out the recovery.

Many employers complain they would like to hire more people but don't have enough applicants. Powell warned that persistent labor shortages could worsen the supply-chain bottlenecks that have already pushed inflation to its highest level in more than three decades.

Many observers now think the central bank may raise interest rates earlier than expected next year, in an effort to keep a lid on rising prices.

Up until now, the Fed has been willing to tolerate somewhat higher inflation in hopes of fostering full employment. But as the jobs recovery drags on, Powell appears to be rethinking that balancing act.

"To get back to the kind of great labor market we had before the pandemic, we're going to need a long expansion," Powell said. "To get that, we're going to need price stability. And in a sense, the risk of persistent high inflation is also a major risk to getting back to such a labor market."

Factories, which have seen strong demand, added 31,000 workers in November.

"Manufacturing is powering through the supply-chain and labor supply issues," Richardson said. "Even though we're seeing a slowdown in supplier deliveries that could impede production, hiring remains solid."

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ARI SHAPIRO, HOST:

It looks like the job market could use a booster shot. The Labor Department said today that U.S. employers added just 210,000 jobs last month. That is the smallest gain reported all year; less than half the number of jobs that were added in October. The report suggests the labor market was losing steam even before the discovery of the new omicron variant. But the news is not all bad. The unemployment rate fell to the lowest it's been since the beginning of the pandemic. NPR's Scott Horsley is here now.

And Scott, what is behind this slowdown in job growth?

SCOTT HORSLEY, BYLINE: Well, Ari, even before the omicron variant was discovered, we were seeing an increase in coronavirus infections in this country, and that takes a toll on businesses that rely on face-to-face traffic. Now, bars and restaurants, for example, added just 11,000 jobs in November; down from 122,000 the month before.

Senior economist Daniel Zhao, who's with the job search website Glassdoor, says a lot of the slowdown last month is in what he calls COVID-sensitive industries.

DANIEL ZHAO: Not only are customers wary of going out to restaurants or traveling when the virus is spreading, workers are also hesitant to come to work, and employers are hesitant to hire.

HORSLEY: Now, hiring was stronger in less sensitive industries like manufacturing and construction. And keep in mind, this report's based on surveys done about three weeks ago, so it does not reflect any possible fallout from the omicron variant.

SHAPIRO: And what might that fallout look like?

HORSLEY: We're still waiting to learn how contagious the new strain is, how sick it might make people. But White House economist Cecilia Rouse says as more people are getting vaccinated, including now younger children, and as people get booster shots, that should offer some measure of protection, both for the public health and the health of the economy.

CECILIA ROUSE: I strongly suspect that the economy will continue to improve. There will be bumps along the way, but it will continue to get better.

HORSLEY: And that's important because the economy is still about 4 million jobs short of where it was before the pandemic.

SHAPIRO: But I mentioned that despite the slowdown in hiring, the unemployment rate declined in November. Explain what's going on there.

HORSLEY: Yeah. The government conducts two surveys every month - one of businesses, which is where we get the jobs numbers, and then one of households, which is where we get the unemployment rate. And usually, the two surveys move more or less in tandem. But in November, they're telling two very different stories. The household survey is really positive. It shows nearly 600,000 people coming off the sidelines, joining the workforce; more than a million people finding jobs. And Rouse says that pushed the unemployment rate all the way down to 4.2%.

ROUSE: The improvement in the unemployment rate is really quite stunning. And it's important to note that we saw improvements in the unemployment rate for Blacks and Hispanics and for Asians, for men and for women, so that was broadly shared. This suggests a labor market where people are coming back and where they're finding jobs.

HORSLEY: Again, this is pre-omicron, but it is encouraging to see more people entering the job market. You know, for months, we've been hearing employers say they'd like to hire more people if they had more applicants.

SHAPIRO: And how much are those people getting paid? What's going on with wages?

HORSLEY: Overall, private sector wages were up 5.9% in November from a year ago. And in ordinary times, that would be a really strong wage increase. Right now though, it's not quite keeping pace with inflation, which is just north of 6%. Workers at the bottom of the income ladder are getting bigger raises, though. For example, restaurant and hotel workers saw their wages rise 13% over the last year.

SHAPIRO: NPR's Scott Horsley, thanks a lot.

HORSLEY: You're welcome.

(SOUNDBITE OF WAX TAILOR'S "UNGODLY FRUIT") Transcript provided by NPR, Copyright NPR.