Fewer employers, less work spell trouble for job market


The U.S. economy added the fewest workers in six months in November, hindered by a resurgence in new COVID-19 cases that, together with a lack of more government relief money, threatens to reverse the recovery from the pandemic recession.

FILE PHOTO: Hundreds of people line up outside the Kentucky Career Center, over two hours prior to its opening, to find assistance with their unemployment claims, in Frankfort, Kentucky, U.S. June 18, 2020. REUTERS/Bryan Woolston

The closely watched employment report also showed 3.9 million people had been out of work for at least six months, with many giving up, a sign of lack of confidence in the labor market. The report, which only covered the first two weeks of November, when the current wave of coronavirus infections started, underscored the challenges facing President-elect Joe Biden when he takes over from President Donald Trump in January.

The economy has recouped only 12.4 million of the 22.2 million jobs lost in March and April. Even with a vaccine on the way, economists are warning of a bleak winter and urged Congress to provide additional fiscal stimulus.

“The recovery is stalling and fragile at best,” said Sung Won Sohn, finance and economics professor at Loyola Marymount University in Los Angeles. “The onset of winter and resurgence of the virus could knock the economy into another dip before the vaccine and additional stimulus from Washington come to the rescue.”

Nonfarm payrolls increased by 245,000 jobs last month after rising by 610,000 in October. That was the smallest gain since the jobs recovery started in May and the fifth straight monthly slowdown in job growth. Economists polled by Reuters had forecast payrolls would increase by 469,000 jobs in November. Hiring peaked at 4.781 million jobs in June.

Job growth last month was held back by further departures of temporary workers hired for the 2020 Census. Local governments continued to shed more workers, especially at schools, causing overall government payrolls to drop by 99,000 jobs, the third straight monthly decline. The private sector added 344,000 jobs.

The retail sector lost 35,000 jobs. Retailers typically embark on seasonal hiring in November, a practice that has been upended by the pandemic. This disruption likely threw off the model the government uses to strip seasonal fluctuations from the data.

The smaller-than-expected job gains added to reports on consumer spending, manufacturing, and services industries in suggesting that the recovery from the worst recession since the Great Depression was losing steam.

“At this rate, complete stagnation or job losses in December would not be a huge surprise,” said Beth Akers, a senior fellow at the Manhattan Institute. “It’s hard to imagine that the remaining jobs we lost early this spring will return until we’ve successfully distributed a vaccine that would allow businesses to return to normal operations.”

U.S. stocks rose as the jobs report reinforced expectations for more government aid. The dollar dipped against a basket of currencies. U.S. Treasury prices were lower.

LONG BOUTS OF UNEMPLOYMENT

The United States is in the midst of a fresh wave of COVID-19 infections. Nearly 200,000 new cases were reported on Wednesday and hospitalizations approached a record 100,000 patients, according to a Reuters tally of official data.

A bipartisan, $908 billion coronavirus aid plan gained momentum in Congress on Thursday as conservative lawmakers expressed their support and leaders in the U.S. Senate and House of Representatives huddled together.

More than $3 trillion in government COVID-19 relief approved earlier this year helped millions of unemployed Americans cover daily expenses and companies keep workers on payrolls, leading to record economic growth in the third quarter. The uncontrolled pandemic and lack of additional fiscal stimulus could result in the economy contracting in the first quarter of 2021.

While the unemployment rate fell to 6.7% from 6.9% in October, that was because 400,000 people dropped out of the labor force. It was also biased down by people misclassifying themselves as being “employed but absent from work.” Without this error, the jobless rate would have been about 7.1%.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 61.5% from 61.7% in October. The share of women in the labor force dipped last month. Industries that tend to employ women have been hard hit by the recession.

Many women have also quit jobs to look after children as education departments moved to online learning. Just over half of the 8 million people who left the labor force between February and April have returned.

The number of people unemployed for 27 weeks or more jumped 385,000 in November. These long-term unemployed accounted for 36.9% of the 10.7 million unemployed last month. About 3.743 million people permanently lost their jobs, up 59,000 from October.

Despite the ample slack in the labor market, average hourly earnings rose 0.3% after nudging up 0.1% in October. That left the year-on-year increase in wages at 4.4%. The average workweek was steady at 34.8 hours.

 Signs of hope for workers in the hard-hit leisure and hospitality field all but disappeared in November, and their prospects for getting re-hired grow bleaker by the month.

Friday’s jobs report showed yet another slowdown in U.S. hiring, with 245,000 new jobs created in the lowest monthly total throughout the labor market recovery that began in May.

In hospitality, which faced the steepest losses in the spring and remains down by 3.4 million jobs compared to February, job growth was relatively flat. With the Covid pandemic surging, positive signs from a summer and fall hiring spree in the sector are harder to find.

Since the spring, there has been a “disproportionately large effect on the leisure and hospitality sector,” said Wendy Edelberg, the director of The Hamilton Project at the Brookings Institution and former chief economist at the Congressional Budget Office.

Added unemployment benefits and government assistance through the Paycheck Protection Program have helped spur consumer spending and keep small businesses like restaurants afloat, she said, and Bureau of Labor Statistics data show that the industry has recovered nearly five million jobs from its April lows.

But with sources of government aid drying up at the end of the year, Edelberg said it’s likely that spending will decline and more small businesses will close without additional sources of aid. That means there may be fewer employers available for those looking for work in the field.

Amy Harmon, 37, and her husband both lost their Los Angeles restaurant jobs on the same day in March. She was only a few months into a new job as a sommelier at an Italian restaurant called chi SPACCA, and was close to qualifying for benefits such as a 401(k) for the first time in her hospitality career.

In September, Harmon was called back to an old server job at The Tasting Kitchen near Venice Beach, but was laid off again after five weeks.

“When we found out we were going to shut down again and knowing that there is no foreseeable help on the way, it’s absolutely terrifying,” she said. Her family had to ask their landlord for relief on rent so that they didn’t lose their apartment. Harmon said they are “barely keeping our heads above water” as bills and student loan payments still arrive even though she’s out of work.

Her prospects for returning to work seem bleak, Harmon said, because there are so many laid off workers applying for the few jobs available and she doesn’t feel she has the qualifications to apply for more skilled work.

And she can’t count on going back to either restaurant job when dining reopens in L.A., because the positions not exist any more. The Tasting Kitchen ownership told staff they were “hanging on by a thread” financially before shutting down and sending workers home.

Sources of real-time economic data, which can provide a more current view than government reports that lags by weeks or months, show that harder times may be ahead.

Data from restaurant reservations service OpenTable shows U.S. bookings at their lowest levels since August, down more than 60% compared to 2019. Job search site ZipRecruiter has seen a “remarkable downturn in new job postings in restaurants and hotels” over the 10 days leading up to today’s jobs report, Julia Pollak, an economist with the firm, said in an interview.

Because the jobs report survey for this month’s numbers was conducted from Nov. 8-14, a further hospitality downturn may not show up until the December report, released in January.

Bruce Grindy, chief economist with the National Restaurant Association, cited a recent survey conducted by the organization as a warning sign.

“In a survey the Association just fielded, 49% of operators said they expect their staffing levels to decline during the next 3 months. Only 5% expect staffing levels to rise,” Grindy said in an email.

Signs of hope for workers in the hard-hit leisure and hospitality field all but disappeared in November, and their prospects for getting re-hired grow bleaker by the month.

Friday’s jobs report showed yet another slowdown in U.S. hiring, with 245,000 new jobs created in the lowest monthly total throughout the labor market recovery that began in May.

In hospitality, which faced the steepest losses in the spring and remains down by 3.4 million jobs compared to February, job growth was relatively flat. With the Covid pandemic surging, positive signs from a summer and fall hiring spree in the sector are harder to find.

Since the spring, there has been a “disproportionately large effect on the leisure and hospitality sector,” said Wendy Edelberg, the director of The Hamilton Project at the Brookings Institution and former chief economist at the Congressional Budget Office.

Added unemployment benefits and government assistance through the Paycheck Protection Program have helped spur consumer spending and keep small businesses like restaurants afloat, she said, and Bureau of Labor Statistics data show that the industry has recovered nearly five million jobs from its April lows.

But with sources of government aid drying up at the end of the year, Edelberg said it’s likely that spending will decline and more small businesses will close without additional sources of aid. That means there may be fewer employers available for those looking for work in the field.

Amy Harmon, 37, and her husband both lost their Los Angeles restaurant jobs on the same day in March. She was only a few months into a new job as a sommelier at an Italian restaurant called chi SPACCA, and was close to qualifying for benefits such as a 401(k) for the first time in her hospitality career.

In September, Harmon was called back to an old server job at The Tasting Kitchen near Venice Beach, but was laid off again after five weeks.

“When we found out we were going to shut down again and knowing that there is no foreseeable help on the way, it’s absolutely terrifying,” she said. Her family had to ask their landlord for relief on rent so that they didn’t lose their apartment. Harmon said they are “barely keeping our heads above water” as bills and student loan payments still arrive even though she’s out of work.

Her prospects for returning to work seem bleak, Harmon said, because there are so many laid off workers applying for the few jobs available and she doesn’t feel she has the qualifications to apply for more skilled work.

And she can’t count on going back to either restaurant job when dining reopens in L.A., because the positions not exist anymore. The Tasting Kitchen ownership told staff they were “hanging on by a thread” financially before shutting down and sending workers home.

Sources of real-time economic data, which can provide a more current view than government reports that lags by weeks or months, show that harder times may be ahead.

Data from restaurant reservations service OpenTable shows U.S. bookings at their lowest levels since August, down more than 60% compared to 2019. Job search site ZipRecruiter has seen a “remarkable downturn in new job postings in restaurants and hotels” over the 10 days leading up to today’s jobs report, Julia Pollak, an economist with the firm, said in an interview.

Because the jobs report survey for this month’s numbers was conducted from Nov. 8-14, a further hospitality downturn may not show up until the December report, released in January.

Bruce Grindy, chief economist with the National Restaurant Association, cited a recent survey conducted by the organization as a warning sign.

“In a survey the Association just fielded, 49% of operators said they expect their staffing levels to decline during the next 3 months. Only 5% expect staffing levels to rise,” Grindy said in an email.

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