Economists Warn Positive Jobs Report Hides Future Challenges

A surprising job gain in February and a drop in the unemployment rate are obscuring the long road to a full recovery from the coronavirus recession, economists say.

The United States added 379,000 jobs last month, more than double what analysts expected, and saw the unemployment rate drop to 6.2 percent, the lowest level since March 2020.

While the February employment report showed signs of an accelerating recovery, job gains were just a drop in the bucket compared to the deep damage accumulated in the job market over the past year. The deceptively low unemployment rate also ignores the millions of Americans who have been kicked out of the workforce by COVID-19 and its disproportionate cost to women of color.

“The numbers are not debatable, they are not doubtful, they are not confusing. It is empty. Millions of Americans have left the workforce and that is not good for our economy and it is definitely not good for the continued growth of the economy, ”said Michelle Holder, a labor economist at John Jay College in New York.

February’s job gains were an undeniable improvement over January’s meager 49,000 gain and included signs that companies were preparing for a post-pandemic economy. The hard hit leisure and hospitality sector added 355,000 jobs, mostly in restaurants and bars that have long been hampered by coronavirus restrictions.

Still, the remarkable gain in that sector covers just a little over a tenth of the 3.5 million jobs in that field claimed by COVID-19 that have yet to be replaced.

The United States has still lost an estimated 9.5 million jobs since the start of the pandemic, more than the total drop in employment during the Great Recession, a gulf that would take more than two years to fill at the rate of February.

Elise Gould, a senior economist at the Economic Policy Institute, calculated that employers would need to add a 2.4 million jobs to cover those that would have been earned if COVID-19 never derailed the economy.

“Returning to pre-recession levels would not fill the entire jobs gap,” he wrote.

The one-time cost of the pandemic has also made the unemployment rate – the number of people unable to find work divided by the number of people who are employed or trying to find a job – almost useless in measuring the health of the job market. .

More than 4 million Americans have stopped looking for work due to the pandemic, according to the February jobs report, and many left the workforce to care for school-age children, care for sick family members or avoid contracting the virus. Since the unemployment rate does not include job seekers, many Americans who would otherwise want to work are not represented in that headline figure.

Federal Reserve Chairman Jerome Powell said during a speech last month, when the unemployment rate was 6.3 percent, that an unemployment rate that includes lost workers would be closer to 10 percent.

As the unemployment rate fell slightly in February, the labor force participation rate remained at 61.4 percent, 1.9 percentage points less than a year ago. The employment-to-population ratio, the proportion of working-age adults with work, did not change either, at 57.3 percent, 3.5 percentage points less than in February 2020.

“This is not to say that the overall unemployment rate is wrong, just that in a pandemic, getting a complete picture of the economy requires looking at the data in multiple ways,” he wrote Cecilia RouseCecilia RouseCBC Endorses Shalanda Young ‘Unequivocally’ for White House Budget Chief The Hill’s Morning Report – Presented by Facebook – Senate Democrats Face Test of Unit; Tanden’s nomination falls on money: Tanden withdraws nomination as Biden’s head of budget | Aid Bill Tests Narrow Democratic Majority | Senate confirms election for Biden for Commerce, chief economist at WH MÁS, chairman of the White House Council of Economic Advisers, in an analysis of friday.

The unemployment rate is often deflated during prolonged recessions when eligible workers lose confidence in the job market and stop looking for work. While the same dynamics suppressed the unemployment rate during the Great Recession, the pandemic has accelerated it with devastating consequences for women and people of color.

Rouse calculated that while black women made up only 14 percent of the female workforce in February 2020, they have accounted for 26 percent of female dropouts since then. Similarly, Hispanic women made up 17 percent of the female workforce a year ago, but they are 27 percent of women who have left.

Overall, 2.3 million women and 1.8 million men have stopped looking for work, and economists say more help from the federal government will be needed to bring them back into the fold.

“Today’s employment report, combined with previous months’ revisions and the retail sales pattern, underscores how dependent on federal aid the recovery remains,” wrote Diane Swonk, Grant Thornton’s chief economist, highlighting the January rise. on consumer spending that followed the December Aid Package becoming law.

“Much of what was destined for low-wage households struggling with unemployment is scheduled to end again in mid-March,” he wrote. “We are still in a very deep hole.”

Biden and Congressional Democrats are trying to pass a $ 1.9 trillion financial aid bill with an extension of expanded unemployment benefits before they expire on March 14. While those unemployment programs will expire briefly, the swift disbursement of another round of stimulus controls could help lost income for struggling families.

“These gains are too slow,” Biden said Friday at the White House. “We cannot take one step forward and two steps back.”

Economists argue that the United States is still poised for a sharp rebound once the country achieves herd immunity, potentially by mid-summer, and can return to something akin to normal life. And while economists acknowledge that there is a light at the end of the tunnel, they say the tunnel may be much longer than it appears now.

“I expect [the unemployment rate] It will continue to drop, dramatically or not, but I am concerned about the degree to which we can bring people back into the American workforce who have disengaged from it, ”Holder said.


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