Public sector hiring continued to decrease. The losses remained concentrated in state and local education. Many schools were still not fully opened during the month. The loss in jobs at the state and local levels since the peak, one year ago in February, is now 1.4 million jobs. This is an area where we will need to see people rehired when schools are reopened; we’ll also need to ramp up hiring to help students catch up on education lost to the pandemic.
Data for December was revised down significantly, with employment falling more than 300,000 during the month. Those losses, coupled with the drop in retail sales in the fourth quarter, underscore how important the additional $900 billion in aid and stimulus passed late in December was. Retail sales rebounded during January as consumers spent their stimulus checks; retail employment came back faster than initially reported.
We are still down 9.5 million jobs from a year ago: 7.1 million of these are in the larger service sector; about a million are in the goods-producing sector. The remainder were in the public sector. Job gains at the federal level have not been enough to offset weakness in public education hiring.
Average hourly earnings edged up by 0.2% but remained over 5% higher than a year ago. That largely reflects the loss in low-wage jobs relative to a year ago, rather than a tightening of labor market conditions. Average weekly hours slipped from the high hit in January. The high level of hours worked in a week reflects many firms attempting to do more with fewer workers as they ramp up.
Separately, the unemployment rate edged down to 6.2% with little change in overall participation. The actual unemployment rate that the Federal Reserve has been citing is closer to 9.5%. That includes the 4.2 million workers who have left the labor force since last year and the workers who were misclassified as absent from work due to COVID-related disruptions but are actually unemployed.
The share of those classified as long-term unemployed, or unemployed for 27 weeks or more, moved up to 41.5%, the highest since 2012. The number of workers forced to accept part-time instead of full-time employment rose to 6.1 million after falling earlier in the recovery. We now have 1.7 million more workers who were forced to accept part-time work for economic reasons, compared to a year ago.
The rise in long-term unemployment and part-time work is worrisome because that is where wounds from the pandemic are likely to fester. Unemployment is demoralizing; after six months, we tend to hit a tipping point when mental and physical health deteriorates, family structure suffers, the well-being of children is undermined and a vicious cycle of unemployment and reduced earnings takes hold in the hardest hit communities.
Any improvement in jobs is welcome news; it appears that we are turning a corner. Today’s jobs report, combined with the revisions to previous months and the pattern of retail sales, underscores how dependent upon federal aid the recovery remains. Much of what was targeted to low-wage households struggling with unemployment is scheduled to lapse again in mid-March; we are still in a very deep hole. It would take more than two years at the current pace of job gains to recoup what we lost to the pandemic, let alone the jobs that would have been created absent the pandemic. We were generating close to 200,000 jobs per month before COVID.