Payroll employment rose by a tepid 245,000 in November, less than half of the downwardly revised pace of 610,00 in October. Total payroll employment is still down 9.8 million from its peak in February and one million more than the job losses during the 2008-09 recession. Government payrolls fell by 99,000; most of those losses were due to cuts in temporary Census workers. The remainder occurred at the state and local levels where education suffered yet another blow.
The employment report revealed three major trends: 1) The resurgence in COVID cases pushed more people to work from home and back to the sidelines of the labor market; 2) the move to online instead of in-store shopping was not enough to keep generating jobs in the retail sector; and, 3) spending by members of high-income households able to work from home is not enough to lift all boats. Employment will no doubt slip back into the red, starting in December.
A little more than 40% of all private payroll gains went to bolster online deliveries. The largest gains were in the hiring of couriers to bring packages to our doors. Seasonal hires in retail were not enough to bolster overall gains. Large losses in most categories more than offset small gains in home furnishings, auto dealers and building material and garden stores.
Professional hires added jobs but at a slower pace during November. Over half of those gains were temporary hires, reflecting the uncertainty of the trajectory of the virus and its impact on the economy this winter. Health care employment slowed as gains at doctors’ and dentists’ offices and among home health care workers partially offset additional job losses at nursing homes. We are still down more than half a million jobs in health care since the onset of the crisis and are likely to suffer more losses as elective procedures are cancelled again in the weeks to come. Hospitals are struggling to care for both COVID and non-COVID patients. The Centers for Disease Control (CDC) director said this week that 90% of the country’s hospitals are currently in “red zones or hot zones” for the virus and close to full.
Leisure and hospitality showed only a modest gain, reflecting modest attendance at sporting events and some increase in travel during the Thanksgiving holiday. Hiring at restaurants and bars fell, reflecting the increased risk of contagion and inability to keep outdoor venues open as temperatures dropped.
The construction and manufacturing sectors added 27,000 each. Gains in construction were concentrated in residential building and road repairs. Manufacturing gains were concentrated in motor vehicles and part.
Separately, the unemployment rate fell to 6.7%, but for the wrong reasons. Participation in the labor force dropped again in November. Women still dominate those losses, but men dropped out at a faster rate in November as job prospects faded. More than four million people have left the labor force entirely since February. This is the first time that participation has fallen nine months after the start of the recession. That speaks to the inability to reopen and ramp up businesses with the virus still running rampant.
The Bureau of Labor Statistics (BLS) reported that the percentage of workers misclassified as absent instead of unemployed rose during the month. The unemployment rate would have been 0.4% higher or moved up to 7.1% if those workers were included in the ranks of the unemployed. The unemployment rate would have topped 9% if the workers who are no longer participating in the labor force were classified as unemployed.
The share of workers forced to resume working from home increased 0.6% to 21.8% in November as offices that had reopened shut again. The ranks of those considered permanently unemployed also rose, while those temporarily unemployed fell. The number of long-term unemployed rose to 3.9 million and now accounts for more than a third of the total jobless. Workers unemployed for more than six months tend to suffer greater consequences than those who quickly find work. Unemployment is demoralizing and, over time, takes a toll on mental and physical health, family structure and the well-being of children.
The slowdown in employment gains is even worse than it appears at first glance, as it reflects the pullback in activity due to a resurgence in cases. That will get worse before it gets better. Curbs on social gatherings have picked up with more states likely to follow the lead of California and enact stay-at-home orders as our hospitals strain under the stress of mounting cases. We are in for a long cold winter, which requires Congress to act quickly to pass an aid package to help stave off the hunger that is already mounting. Donate to your local food bank.
Copyright © 2020 Diane Swonk – All rights reserved. The information provided herein is believed to be obtained from sources deemed to be accurate, timely and reliable. However, no assurance is given in that respect. The reader should not rely on this information in making economic, financial, investment or any other decisions. This communication does not constitute an offer or solicitation, or solicitation of any offer to buy or sell any security, investment or other product. Likewise, this communication serves to provide certain opinions on current market conditions, economic policy or trends and is not a recommendation to engage in, or refrain from engaging, in a particular course of action.