Job Market Trends

The nation’s economy lost jobs last month for the first time since April, when the coronavirus (COVID-19) pandemic threw the economy into lockdown.

The Labor Department reports that nonfarm payrolls shrank by 140,000 in December. To find the main source of the damage, one needs to look no farther than the hospitality industry. These COVID-19-sensitive businesses -- particularly restaurants -- lost nearly a half-million jobs.

December marked the end to what had appeared to be a recovering job market. The economy began adding jobs in May and had restored more than 12 million jobs until last month.

Despite the setback, two numbers remained unchanged last month. The number of people who were out of work remained at 10.7 million, and the unemployment rate was unchanged at 6.7 percent.

In addition to the huge loss of jobs in the hospitality industry, private education shed 63,000 jobs and 45,000 government jobs disappeared.

Some industries added jobs

On the plus side, retailers added 121,000 jobs in December, even as more holiday sales moved to online channels. More than half the gain came at general merchandise stores and warehouses.

Employment in business and professional services grew by 161,000 last month, but a large number of those jobs were temporary in nature. Construction added 51,000 jobs in December, but employment in the industry is 226,000 below its February 2020 level, just before the pandemic.

Economists say the employment report shows there was a need for the coronavirus stimulus/aid bill Congress passed last month. It includes an extra $300 a week in unemployment benefits and a one-time $600 direct payment to every American.

President-elect Biden has served notice that more aid/stimulus will be coming in the weeks ahead now that Democrats control the White House and both chambers of Congress.

The economy continued to add jobs in July, but it was at a much slower rate than in May and June. The Labor Department reports that there were 1.8 million new jobs last month, slightly better than most economists expected.

The unemployment rate fell to 10.2 percent as job growth was reported among all racial demographics and among both men and women.

The number of unemployed workers on temporary layoff fell by 1.3 million in July to 9.2 million, about half its April level. The number of permanent job losers and the number of unemployed reentrants to the labor force were virtually unchanged over the month, at 2.9 million and 2.4 million, respectively. 

“The rate of recovery in the labor market slowed in July, as job growth over the month was less than half that for June,” said William Beach, commissioner of the Bureau of Labor Statistics. “As of July, total nonfarm employment is 12.9 million, or 8.4 percent, lower than in February, before the pandemic crisis unfolded in many parts of the United States.”

Leisure and hospitality lead the way

In July, the leisure and hospitality sector — perhaps the hardest hit by the pandemic and the resulting economic shutdown — continued to bounce back. New jobs in that sector rose by 592,000, accounting for about a third of the month’s overall job gains.

Despite those gains over the last three months, the number of jobs in food services and drinking places is down by 2.6 million since February. There was significant growth, however, in employment in amusements, gambling, and recreation, with more than 100,000 new jobs.

Jobs also continued to return to the business and professional services industry, to government, and to health care. There were smaller gains in manufacturing and construction.

Retail, another sector hard-hit by the pandemic, continued to add jobs last month as more stores reopened. Retail added 258,000 jobs, but employment in the industry is 913,000 lower than in February.

In fact, it’s sometimes hard to remember that the unemployment rate in February was near a record low of 3.5 percent. 

“On balance, we’re still in a hole,” Julia Coronado, an economist at MacroPolicy Perspectives, told The Wall Street Journal. “The pace of recovery has really been set back by the resurgence of the virus. Given how far we have to go to re-employ the people who have become unemployed, that’s very discouraging.”

On the heels of a shocking increase in jobs in May, the Labor Department reports that the U.S. economy added 4.8 million jobs in June as businesses began to reopen. The unemployment rate fell to 11.1 percent.

The number of unemployed people who were on temporary layoffs fell by 4.8 million to 10.6 million. That good news, however, was offset by a rising number of people whose jobs are now considered permanently eliminated. That number rose by 588,000 to 2.9 million in June. 

“This rebound in business activity accelerated in June,” said William Beach, commissioner of the Bureau of Labor Statistics. “Nevertheless, total nonfarm employment is 14.7 million, or 9.6 

percent lower than in February.” Furthermore, although unemployment continued to fall in June, the unemployment rate and the number of unemployed people are up by 7.6 percentage points and 12.0 million, respectively, since February.”

Leisure and hospitality lead the way

As it did in May, the leisure and hospitality sector led June’s job creation as more of these types of businesses reopened. The sector added 2.1 million jobs, accounting for about two-fifths of the gain in total nonfarm employment. 

Employment in food services and drinking places rose by 1.5 million, following a similar gain in May. Even with these gains, however, employment in food services and bars is down by 3.1 million since February -- just before the pandemic.

Analysts say the June numbers need to be taken with a rather large grain of salt because some of those jobs that were created in early June may have disappeared again, or may do so in the near future. With the recent spike in coronavirus (COVID-19) cases some bars have closed again in Texas and California. Other states may be considering a similar move.

In New York, Gov. Andrew Cuomo has rescinded an order that would have allowed indoor dining at restaurants, starting this week. Other states where the virus remains in check are reportedly rethinking their reopening plans as officials watch what’s happening in the South and Southwest.

Retail job gains

The same could be true, to a lesser extent, in the retail sector. Retailers added 740,000 positions last month following a 372,000 job gain in May. However, the sector lost 2.4 million jobs in March and April combined, so the industry is operating with 1.3 million fewer jobs than it did in February.

Meanwhile, some retailers are rethinking their reopening plans as well. Apple has added dozens of stores to its list of Apple Stores that are temporarily closed, and McDonald’s has pushed back its dining room reopening plans by three weeks.

In nearly every category, job creation rose but still has a long way to go before reaching pre-pandemic levels. For example, professional and business services added 306,000 jobs in June, but the government notes that employment is 1.8 million below its February level.