A surprising job gain in February and a drop in the unemployment rate are obscuring the long road to a full recovery from the coronavirus recession, economists say.
The U.S. created 379,000 jobs last month, more than double what analysts had expected, and saw the unemployment rate drop to 6.2%, the lowest level since March 2020.
Although the February jobs report showed signs of an accelerated recovery, job gains were only a drop in the ocean compared to the profound damage accumulated in the labor market last year. The deceptively low unemployment rate also ignores the millions of Americans who were expelled from the workforce by COVID-19 and their disproportionate number of women of color.
“The numbers are not debatable, they are not doubtful, they are not confusing. It is clear. Millions of Americans have left the workforce and it is not good for our economy and it is definitely not good for the continued growth of the economy, ”said Michelle Holder, labor economist at John Jay College in New York.
Employment gains in February were an undeniable improvement over January’s insufficient increase of 49,000 and included signs of companies preparing for a post-pandemic economy. The hard-hit leisure and hospitality sector created 355,000 jobs, mainly in restaurants and bars that have long been hampered by coronavirus restrictions.
Even so, the notable gain in this sector covers just over a tenth of the 3.5 million jobs in this field claimed by COVID-19 that have not yet been replaced.
The United States is still cutting about 9.5 million jobs since the start of the pandemic, more than the total decline in employment during the Great Recession, an abyss that would take more than two years to fill at the pace of February.
Elise Gould, a senior economist at the Institute for Economic Policy, estimated that employers would need to add a 2.4 million jobs to cover those that would have been won if COVID-19 never hurt the economy.
“Returning to pre-recession levels would not even come close to filling the total job gap,” she wrote.
The pandemic’s unique number has also made the unemployment rate – the number of people unable to find work divided by the number of people who are employed or trying to find a job – almost useless for assessing the health of the labor market.
More than 4 million Americans have stopped looking for work due to the pandemic, according to the February job report, with many leaving the job market to care for school-age children, care for sick family members or avoid contracting the virus. Since the unemployment rate does not include those who are not looking for a job, many Americans who would otherwise like to work are not represented in that number.
Federal Reserve Chairman Jerome Powell said during a speech last month – when the unemployment rate was 6.3 percent – that an unemployment rate, including lost workers, would be closer to 10 percent.
As the unemployment rate fell slightly in February, the labor force participation rate remained at 61.4 percent, 1.9 percentage points below what it was a year ago. The employment-population ratio – the proportion of adults of working age with jobs – was also unchanged, at 57.3 percent, 3.5 percentage points below February 2020.
“This does not mean that the headline unemployment rate is wrong, just that, in a pandemic, getting a complete picture of the economy requires looking at the data in several ways,” he wrote. Cecilia Rouse
Cecilia RouseCBC ‘unequivocally’ endorses Shalanda Young as head of the White House budget The Hill’s Morning Report – Presented by Facebook – Senate Dems faces unit test; Tanden’s appointment falls on the money: Tanden withdraws appointment as Biden’s chief budget officer | Relief project tests narrow Democratic majority | Senate confirms Biden’s choices for Commerce, WH MORE’s chief economist, chairman of the White House Council of Economic Advisers, in a Friday analysis.
The unemployment rate is often deflated during prolonged recessions, when eligible workers lose confidence in the labor market and stop looking for jobs. While the same dynamic has suppressed the unemployment rate during the Great Recession, the pandemic has put it on an acceleration with devastating consequences for women and people of color.
Rouse calculated that, while black women accounted for only 14% of the female workforce in February 2020, they accounted for 26% of female workforce dropouts since then. Likewise, Hispanic women constituted 17% of the female workforce a year ago, but 27% of women have left.
Overall, 2.3 million women and 1.8 million men have stopped looking for jobs, and economists say more help from the federal government will be needed to bring them back to the fold.
“Today’s job report, combined with previous months’ revisions and the pattern of retail sales, highlights how dependent on federal aid the recovery remains,” wrote Diane Swonk, chief economist at Grant Thornton, noting the increase in January in consumer spending that followed the December Aid Package being signed into law.
“Much of what was targeted at low-income families struggling with unemployment is scheduled to expire again in mid-March,” she wrote. “We are still in a very deep hole.”
Biden and Congressional Democrats are trying to pass a $ 1.9 trillion economic relief bill with an extension of unemployment benefits before they expire on March 14. While these unemployment programs will expire soon, the rapid disbursement of another round of stimulus checks can help to mitigate the loss of income for families in distress.
“These gains are going very slowly,” said Biden on Friday at the White House. “We cannot take one step forward and two steps back.”
Economists argue that the United States is still ready for a strong recovery once the country achieves collective immunity – potentially in the middle of the summer – and can return to some appearance of normal life. And while economists recognize that there is a light at the end of the tunnel, they say the tunnel may be much longer than it looks now.
“I wait [the unemployment rate] continue to fall, whether abruptly or not, but I am concerned about the degree to which we are able to bring back people from the American workforce, ”said Holder.