It’s nice to have a pleasant surprise for once. The feared disruption of the labor market from the omicron variant was not as bad as expected in January, according to today’s employment figures from the Bureau of Labor Statistics. Both the household and establishment surveys show employment rising as the labor market continues to briskly recover from the initial COVID-19 shock. While progress is still needed, 2022 is off to a good start.
Not only is 2022 beginning well, but the latest revisions show that 2021 was much better than originally thought. The average monthly payroll gain last year was over a half million, so while things might have appeared volatile at the time, employment was actually growing strongly over the year. While the revisions added a large number of jobs to the total count, the distribution was very uneven. The cumulative hit to leisure and hospitality employment over the pandemic is a drop of more than 10%, now larger than previously thought.
The household survey continued to show strong progress as well. The unemployment rate rose slightly in January, but that was due to a rise in labor force participation. The employment to population ratio, both for the overall population and prime-age workers ages 25 to 54, rose. The speed of recovery might have slowed a bit over the month for the prime-age employment ratio but it’s still on track to recover to pre-pandemic levels by this summer.
Today’s report suggests that while omicron had a clear impact on day-to-day life in the United States, the labor market impact was less severe than expected. As we have seen in the past, the economic fallout from each successive wave of the pandemic has been smaller and smaller. This trend, along with strong demand for workers suggests 2022 could be a year with continued strong gains for the labor market.