It seems like the U.S labor market just plowed right through Omicron surge
Like a snowplow cleaning up the roads, the U.S. workforce pushed through the January surge of Omicron cases without missing a beat, adding 467,000 workers to the payrolls last month.
Friday’s jobs report crushed expectations that employers would pull back on hiring in January as new COVID cases topped 1 million several times last month and are still generating nearly 300,000 new infections a day this week.
And, as has become increasingly common in 2021, Friday’s report included significant revisions to previously reported numbers. The Bureau of Labor Statistics revised its November and December job figures on Friday, showing a whopping 709,000 more jobs added during those two months combined than previously reported. That means the labor market was much stronger than previously thought when it collided with the Omicron wave.
Overall, the U.S. unemployment rate ticked up slightly to 4% in January, compared with the 3.9% low reached in December.
It seems a clear indication that the effects from Omicron will be “temporary,” says Lauren Melodia, deputy director of macroeconomic analysis at the Roosevelt Institute.
“This Omicron disruption has been really quick and severe. It is absolutely different from the first shutdown where we decided to lock down our society, shut down businesses, and kind of hunker down for what we expected to be a long recession,” Melodia tells Fortune.
The data shows that right now, employers are holding on to their workers; there haven’t been massive layoffs, Melodia says. In fact, there was actually strong job growth in leisure and hospitality—151,000 in that sector alone—as well as in retail, transportation, and warehousing in January. That all points to employers keeping more temporary and holiday workers on the payroll.
“Businesses right now are trying to stay open, and they’re asking customers to be patient,” Melodia says. And while millions of employees did call out sick last month with COVID, there wasn’t an immediate labor effect. Instead, the U.S. may see this disruption play out in bottlenecks or business closures later on down the line, Melodia says.
The overall labor force participation ticked up as well to 62.2%, but that was mostly owing to annual adjustments to the population. The BLS updates the household sample to better reflect changes in the population. In this case, there was an increase in those ages 35 to 64 and a large decrease in the size of the population age 65 and older, which participates at a low rate.
The major revisions in recent months are likely happening because many busy, growing companies are taking longer to respond to the BLS’s labor surveys.
Taking the full picture into account, the U.S. economy added 6.1 million jobs over 12 months to January 2022. That’s impressive considering last January, the U.S. had lost 9.11 million jobs dating back to January 2020.
Yet “even with this strong, steady growth,” and the series of huge upward revisions of job additions, the U.S. is still missing about “5.3 million jobs [from] our pre-pandemic projected trend,” writes Aaron Sojourner, a professor at the University of Minnesota’s Carlson School of Management.
Melodia says that despite people fearing a net job loss in January because of “the insanity of the Omicron surge,” instead we have strong job growth, steady labor force participation, and employment increases. It demonstrates that the Biden administration “did sufficient public health and social safety net policy to help American workers and businesses weather this storm,” she notes. “It’s great to see they’ve been successful at keeping the economy together thus far and through the past few months.”
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