Barron's - USA (2021-02-08)

38 BARRON’S February 8, 2021

THE ECONOMY

Temporary-help employmentrose by 3.1% in

January, the fastest rate since October. The temp

sector is often a bellwether for hiring elsewhere.

January’s Jobs Report

Underscores Urgency

Of Vaccination Push

T

he U.S. recovery

has paused, with

private sector busi-

nesses adding just

6,000 jobs in Janu-

ary. At that rate, it

would take 119

years before employment returned to

the prepandemic level of February

2020. Good thing, then, that hiring

should pick up as more consumers get

vaccinated and more money gets dis-

tributed by the federal government—

but the latest numbers suggest it could

be a rough slog until then.

Start with the bad news from the

establishment survey portion of the

jobs report. Retailers, warehouses,

and delivery services lost a combined

69,000 jobs in January on a season-

ally adjusted basis. Construction and

durable-goods manufacturing—two of

the most reliably cyclical sectors in the

economy and among the most obvious

beneficiaries of the booms in home

building and car-buying—lost a com-

bined 20,000 jobs. The health-care

sector cut 30,000 jobs. For all of these

categories, January was the first nega-

tive month since April. Those sectors

had done well in December even as

the viral outbreak worsened, adding a

combined 220,000 jobs, but their

good fortune seems to have run out.

State and local governments also

continued to cut their noneducational

workforces, shaving almost 20,000

jobs in January. The most obvious

bright spot was the apparent surge in

hiring at public and private schools,

which theoretically added almost

120,000 jobs on a seasonally adjusted

basis. But those gains are likely arti-

facts of a broken seasonal-adjustment

algorithm more than anything else.

School employment normally falls

about 4% between December and Jan-

uary. This year, the drop was only 3%,

but from a much lower base.

Unsurprisingly, the separate survey

of households that is part of the jobs

report found no meaningful change in

the jobless rate after accounting for

the surge in the number of people who

aren’t counted as being in the labor

force due to the pandemic. This ad-

justed measure has been flat at just

above 9% since October, because the

drop in the number of unemployed

has largely been offset by the rise in

the number of people who have tem-

porarily left the labor force. Worry-

ingly, the share of Americans who are

counted as unemployed who have

been jobless for 27 weeks or longer

has soared to 40%, the highest level

since 2012.

That’s not to say there isn’t any

good news in this month’s report. The

third wave of the viral outbreak seems

to have crested, as have the associated

job losses in leisure, hospitality, and

personal services. Those sectors lost

about 54,000 jobs in January, which is

far less severe than the 554,000 jobs

lost in December. Bars and restau-

rants shed slightly fewer jobs in Janu-

ary than they did inNovember.

And some sectors actually did well.

Employment at temporary-help ser-

vices rose by 3.1% in January—the

fastest monthly growth rate since Oc-

tober, and significantly faster than the

average monthly growth rate from

August through December. Temp

agencies are extremely sensitive to the

business cycle, with hiring there often

anticipating gains in permanent em-

ployment elsewhere.

E

ven more encouraging are

the data for several highly

paid sectors. Earlier in the

pandemic, job losses in fi-

nance, tech, and consulting were far

smaller than at restaurants or den-

tists’ offices, but they were neverthe-

less alarming because they implied

that the pandemic would do long-

term damage to the broader economy.

And while layoffs were comparatively

low, Indeed’s chief economist Jed

Kolko found that high-paying em-

ployers were among the most aggres-

sive at cutting job postings because

they wanted to avoid saddling them-

selves with expensive labor at a time

of economic uncertainty.

While the financial sector has had a

mild downturn during the pandemic

compared with the 2008 crisis, the

tech and management consulting in-

dustries initially shed far more jobs

than during the worst of the financial

crisis. As of last month, however, em-

ployment in all three has either re-

turned to where it was before the pan-

demic or is now even higher. What’s

more, Kolko says that hiring for tech

and finance is accelerating, with job

postings up more than 20% and 11%,

respectively, since the end of Septem-

ber—a sign of rising business confi-

dence in the state of the economy

once the acute health crisis passes.

There is also good news in the

household survey, which implies that

total employment rose by 381,000 in

January after adjusting for the latest

Census population estimates. That

would be the best month of growth

since October. Even better, the gains

were led by full-time jobs, which

were up more than 300,000. That

helped contribute to the drop in the

number of Americans working part

time who would rather be working

full time, as well as the massive drop

in unemployment.

The new population estimates,

however, are potentially a cause for

concern. For the past three years,

annual population revisions have

cumulatively reduced the number of

American adults by 2.1 million peo-

ple, with the active labor force

shrinking by a total of 1.2 million.

That’s the biggest three-year decline

on record, by far.

Money from the government

should be able to tide over workers

and businesses until vaccinations

restore normalcy. The clock is tick-

ing.B

Email: [email protected]

By Matthew C.

Klein

Snapping Back

Several high-paid sectors fell far harder in 2020 than in 2008 but have also rebounded much more

quickly,withparticularlysharpgainsinthepastfewmonths.

Bureau of Labor Statistics; Barron's calculations

Finance and

Insurance

(corona crisis)

Tech (corona

crisis)

Consulting

(corona crisis)

Tech (financial

crisis)

Consulting

(financial crisis)

Financial and

insurance

(financial crisis)

94

Feb. 2020 ’21

96

98

100

Payroll employment, cycle start = 100