This is not a good start to 2021. Today’s employment report from the Bureau of Labor Statistics is essentially exactly the opposite of what we need almost a year into the pandemic. Not only was payroll growth slow, but the gains were relatively concentrated in certain sectors. Compared to last month, we are adding jobs. However, more industries shed jobs in January than added them.
There are not many positive things to say about this report. The unemployment rate fell, but so did the labor force participation rate. We are still well below where we were in February 2020, and to see no progress there is concerning. And while we’re adding payrolls, it would take over 28 years at our current 3-month average pace to fill the gap in jobs we have lost since February.
In case anyone thought the impact of the recent surge in coronavirus cases was a just blip, the same industries continue to be hit. Leisure and hospitality once again lost jobs, though at a smaller rate than what we saw in December. There was also weakness in industries less directly affected by the pandemic, as the retail sector shed 38,000 jobs
This report shows that the labor market is treading water. You can tread water for a while when you are close to shore, but you cannot do it when you are miles away. The labor market is miles away from where it needs to be.