The US economy created 379,000 jobs in February, exceeding economists’ estimates of 210,000, and indicating that a year after the pandemic, the job market is finally showing signs of recovery.
In the first full monthly employment report under President Joe Biden, the unemployment rate fell to 6.2 percent, from 6.3 percent in January, according to data released Friday by the Bureau of Labor Statistics.
“The ship is headed in the right direction and the additional stimulus coming from Congress must be the wind in the sails to get the economy back on track,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.
The latest job report comes after a month of stumbling blocks in rolling out the Covid-19 vaccine and cold weather that plunged Texas and large parts of the South into a deep freeze that froze oil rigs, disrupting domestic plumbing and costing lives.
The January jobs report, which showed that only 49,000 jobs were added, was revised upwards on Friday to 166,000.
While the economy is clearly creating jobs, these gains mask the extent to which the labor market is still being held back and the number of people who have been left behind for a variety of reasons, from childcare obligations to health concerns. job opportunities in fields still devastated by the pandemic.
Although monthly employment earnings have risen and decreased sharply in the past year, a comprehensive pattern of reduced employment earnings worries labor market watchers.
“The unemployment rate itself is a terrible descriptor of current conditions in the labor market,” said Andrew Stettner, senior member of the Century Foundation.
Dan North, chief economist for North America at Euler Hermes, said that while nearly 60% of jobs lost since the pandemic began have been recovered, the labor force participation rate shows another story. “When you look at the participation rate, we recover about 41% of what was lost – so it is slower,” he said.
“When you look at the participation rate, we recover about 41 percent of what was lost.”
The discrepancy arises due to the way the government counts who has a job and who is actively looking for a job. People are not captured by the official unemployment rate if they leave the workforce. “There is a lower participation rate because people left. This is the disconnect, ”said North.
Federal Reserve Chairman Jerome Powell said last month that the country’s real unemployment rate is closer to 10%, and the drop in the labor force participation rate – which was 63.4% in February 2020, when unemployment was only 3.5% – reflects this. “My guess is that we won’t be seeing this again until the end of 2022,” said Bob Phillips, co-founder of the Spectrum Management Group.
Mark Hamrick, a senior economic analyst at Bankrate, said the hard-won gains in labor force participation before the pandemic were a function of a long period of job growth. “The low unemployment rate was essentially leading to further improvements in the fortunes of individuals in sectors and communities that previously did not participate” in the early years of the economic recovery, said Hamrick.
Now, many of these individuals face an existential threat to their job prospects. Covid-19 was an especially hard blow for the service sectors that depend on personal contact, such as travel, dining, entertainment and personal retail. People who have these jobs – many of whom are low-skilled and low-paid – are already at greater risk of being left behind economically and now are also at risk of being left behind in job recovery.
While people with higher education lost proportionally less jobs and recovered more from them, people who graduated from high school, but never obtained a university degree, were not so lucky. “Workers with lower wages, workers with less education … they were left behind. They have skills that have not been developed and we are all less wealthy because of that, ”said Phillips.
Women, especially young women, have lost ground – an observation noted by Powell of the Fed, as well as by other officials, as an obstacle that could prevent a broader economic recovery. “Women are staying at home because of the school situation, so this is a really significant change that Covid has brought and will probably stay with us for a while, I think – schools are opening slowly,” said North.
They will never make up for that time outside the workforce, because they will never make up for the skills they would have acquired by working.
“One of the main determinants of whether someone is in the workforce now is whether the children are in school. Since this seems to be resolved, it could lead to more individuals in the workforce, ”said Hamrick. “And it would be expected that a good number of these people could be reemployed.”
Time is running out, however, for workers who are still waiting for the opportunity to rent the workforce. Another metric that alarms labor economists is the percentage of people classified as long-term unemployed – that is, people without a job for 27 weeks or more. These workers, who number about 4 million, now represent about 2 in 5 of the unemployed in America.
The longer unemployment lasts, the longer that duration becomes an obstacle in its own right, as employers can realize that people’s skills have atrophied. In a job market with high unemployment, hiring managers can then choose to choose a candidate with a shorter time out of the workforce, reinforcing the challenges faced by the long-term unemployed.
“When people are out of the job market, they just don’t keep up with changes in work patterns and skill sets, and that becomes a bigger barrier to getting back to work,” said Phillips.
“The longer it takes someone to become active in the job market … history shows that they will never make up for that time, because they will never make up for the lost skills they did not acquire while working.”