Job losses spread across the economy in January
San José, CA – On Friday, February 5 the U.S. Department of Labor released their monthly jobs report showing a very small gain of 49,000 net new jobs. This was only half of what economists had predicted, and the job loss in December was revised up by 87,000, so there were still 178,000 fewer jobs in January than in November.
In December, more than 82% of the job losses were concentrated in one industry, leisure and hospitality, which includes hotels, restaurants and other live entertainment. These losses were almost entirely caused by the surge in the COVID-19 pandemic during the winter and especially over the holidays. In fact, 62% of industries gained jobs, although this was swamped by the losses in hospitality and leisure.
But in January, the job losses spread to health care and social assistance, transportation and warehousing, retail trade, and manufacturing of durable goods (cars, appliances, etc.). In fact almost 52% of industries lost jobs in January, not just ones directly impacted by the pandemic. This shows that even the most welcomed retreat of the pandemic will not guarantee a strong job recovery.
In the same report, the official unemployment rate fell from 6.7% in December to 6.3% in January. But because of the annual revision to the previous year’s data, it is difficult to compare the two months. The percentage of the unemployed who have been out of work for a long period of time, which is not affected by the adjustment, continued to rise to a record high. In January, almost 40% (39.5%) of the unemployed had been out of work for six months or more. This means that even with the extension of the federal Pandemic Emergency Unemployment Compensation, or PEUC for those out of work more than six months, more and more people will be running out of unemployment assistance.
Overall, the economy is continuing to show more and more inequality. The stock market, which is mostly owned by top 1%, continues to set new record highs, making the billionaires richer and richer. Housing prices continue to rise, boosting the wealth of home owners, while more and more tenants are falling behind on their rents, putting themselves at risk of eviction, even with the current government moratorium. Well-paid professionals who can work from home have far lower rates of unemployment, estimated at under 5%, while the lowest paid workers have unemployment rates at or above 25%.