US Unemployment Rate Falls to 4.2% as More People Find Jobs | Chicago News
The U.S. unemployment rate fell last month to its lowest level since the start of the pandemic, even as employers appeared to slow down their hiring – a mixed picture that pointed to a resilient economy that puts more people to work.
The government reported on Friday that businesses and other employers created just 210,000 jobs in November, the smallest monthly gain in nearly a year and less than half of October’s increase of 546,000.
But other data from the Ministry of Labor report paints a brighter picture. The unemployment rate fell from 4.6% to 4.2% as a substantial 1.1 million Americans said they found jobs last month.
The US economy remains threatened by soaring inflation, labor and supply shortages and the potential impact of the omicron variant of the coronavirus. But for now, Americans are spending freely and the economy is expected to grow at an annual rate of 7% in the last three months of the year, a sharp rebound from the 2.1% pace in the previous quarter, when the delta variant has hampered growth. .
Employers in some industries, such as restaurants, bars and hotels, cut hires in November. In contrast, employment growth remained strong in areas such as transportation and warehousing, which benefit from the growth in e-commerce.
The drop in the unemployment rate was particularly encouraging as it coincided with an influx of half a million job seekers into the workforce, most of whom quickly found work. Normally, many of these people would take a long time to find a job and would be counted as unemployed until they did. The influx of new job seekers, if continued, would help alleviate labor shortages that have plagued many employers since the economy began to recover from the pandemic.
“This is good news for job seekers and workers, as well as for businesses,” said Julia Pollak, chief economist at online jobs site ZipRecruiter. âIt seems that supply constraints are easing a bit with low unemployment and high wage growth,â two factors that often encourage people to look for work.
The November report reflects a discrepancy between two surveys the government conducts each month. The unemployment rate is calculated from a household survey. For the past month, that survey found that an additional 1.1 million people said they were employed. A separate survey of employers, called the Payroll Survey, reported only 210,000 additional jobs.
Although the results of the two surveys are generally consistent over the long term, they can differ significantly over the course of a month. For November, economists noted that the sharp increase in employment in the household survey brought that figure in line with larger increases in the payroll survey in previous months.
Hiring gains in the Payroll Survey have also been revised significantly upward in recent months, and some economists have suggested it will likely happen again in the months to come.
âI feel like the household estimate is closer to the truth about what’s going on in the labor market andâ¦ should anticipate a significant upward revision to November data next month,â said Joseph Brusuelas, economist at RSM, a tax agency and consulting firm.
The household survey also captures the self-employed and concert workers, whose ranks have grown steadily since the start of the pandemic, unlike the payroll survey. Some economists attribute part of the country’s labor shortage to an increase in the number of people who have recently gone to work for themselves.
Among them is Daniel Nolan of Raleigh, North Carolina. Like millions of other Americans, Nolan, 36, has seen his life and work disrupted by COVID-19. Her 9-year-old son was in virtual school when the pandemic started. And his cancer-stricken stepfather moved in with his family, prompting Nolan to quit his job as a software engineer at a private equity firm.
Nolan expected this period to last only a few months. But when he started looking for work again, the job offers he received did not match what he was looking for. So, in August, he decided to stand on his own feet.
So far, Nolan said, he earns about the same income as before. He plans to continue counseling for at least two more years – and may never return to a corporate job.
âI am able to earn at least as much as I earned in my previous job and still have the flexibility to be a consultant,â he said.
Friday’s report showed that the number of unemployed Americans fell in November to 6.9 million, from 5.7 million before the pandemic. And average wages, which have risen as employers try to attract or keep workers, are up 4.8% from a year ago.
For months, employers have struggled with labor shortages because many people who lost their jobs during the pandemic have not, for various reasons, returned to the workforce. But last month, nearly 600,000 people withdrew to look for jobs and were generally hired quickly. The government classifies people as unemployed only if they are actively looking for work.
As a result, the proportion of Americans in the labor force 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 to come.
Even though the unemployment rate has fallen steadily this year, the proportion of Americans who are working or looking for a job has barely budged, at least until this month. A shortage of job seekers tends to limit hiring and forces companies to pay more to attract and retain employees. A higher salary can help support spending and growth. But it can also fuel inflation if companies raise prices to offset their higher labor costs, which they often do.
The continued increase in the number of job seekers is a crucial issue for the Federal Reserve. If the proportion of people in the labor force does not increase much, that would suggest that the Fed is approaching its maximum employment target.
With inflation at a three-decade high and well above the Fed’s annual 2% target, meeting his tenure would increase pressure on President Jerome Powell to raise interest rates as soon as possible. This would make loans more expensive for many individuals and businesses.
President Joe Biden on Friday underlined the drop in the unemployment rate, which he called “extraordinary progress”. Nonetheless, the slowdown in job growth, if it persists, will be a challenge for Biden, who has received poor marks in a handful of opinion polls on how he has handled the economy.
Although most indicators show the economy continues to rebound, White House advisers have privately expressed frustration that the president has not earned credit for the improvement and is instead the subject of criticism regarding soaring inflation and gas prices that have weighed on Americans in recent months.
The government’s business survey suggested some employers were more cautious about hiring last month. Restaurants, bars and hotels created only 23,000 jobs, up from 170,000 in October. This could reflect the effects of a slight increase in COVID-19 cases last month and a reduction in outdoor meals.
Retailers cut 20,000 jobs, a sign that hiring during the holidays has not been as strong as in previous years. But transportation and warehousing companies added 50,000 jobs, indicating that online retailers and shippers are planning healthy online shopping.
Jeff Crivello, CEO of BBQ Holdings, which owns around 300 restaurants, said hiring has gotten a little easier for him in recent months. None of its restaurants close earlier due to a lack of staff. But it’s still a struggle. The company hired more than 300 people in November, but still has around 500 open positions.
âThe pandemic,â said Crivello, âushered in a seismic shift in consumer behavior and demand and the desires of the workforce.â
His company has increased the average hourly wage by 15% since the start of the pandemic, but is competing with new opportunities many restaurant workers have, including higher-paying jobs in warehouses or in trucking. Many young workers, Crivello said, find jobs in the cannabis industry or in games or even make money by getting followed on social media.
The employment outlook for the coming months has become more blurry with the emergence of the omicron variant. Little is known about omicron, and large-scale business closures are considered unlikely. Still, omicron could discourage some Americans from traveling, shopping and dining out in the coming months and potentially slowing the economy.