October 2021 Jobs Report: Gain of 531,000 Offers Brighter Picture

Employers added 531,000 jobs in October, a big improvement from the previous month and a sign of optimism as the latest coronavirus surge eases.,

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Hiring rose sharply last month.

Cumulative change in jobs since before the pandemic

-20

-15

-10

-5 mil.

April

June

Sept.

Jan. ’21

April

-4.2 million jobs since Feb. 2020

+18.2 million since April 2020

+531,000
in October

152.5 million jobs in February 2020

Data is seasonally adjusted.

Source: Bureau of Labor Statistics

By Ella Koeze

The American economy is showing renewed signs of life, with employers hiring workers in greater numbers than they have in months.

The Labor Department reported Friday that payrolls in October jumped by 531,000, the best showing since July. The gains were reflected in a broad variety of fields, led by restaurants and bars, as well as factories, offices and warehouses.

The improvements followed a late-summer lull caused by the latest coronavirus surge and by supply chain problems that have delayed shipments, hampered manufacturers and left gaps on supermarket shelves.

Business leaders and economists said October’s data pointed to faster growth in the final months of the year, especially with shoppers feeling bullish as the holiday season approaches.

“The world is normalizing,” said Brian Moynihan, the chief executive of Bank of America. “We’re winning the war on the virus in Europe and North America, knock on wood. Consumers are spending a lot of money, and people are traveling, going to hotels and taking vacations.”

The report also provided a brighter picture of earlier months. Hiring figures for August and September were revised upward by 235,000, bringing the three-month average for job growth to 442,000.

The latest data was welcome news for the Biden administration, which is struggling to win congressional approval of its legislative agenda and endured a disappointing showing by Democrats in elections on Tuesday.

“Our economy is on the move,” President Biden declared Friday.

On Thursday, the administration set a Jan. 4 deadline for large companies to mandate coronavirus vaccinations or start weekly tests for workers. Administration officials hope the requirements will foster hiring because workers will be less afraid of contracting the coronavirus.

There are signs that anxiety about the pandemic is easing. Last month, the share of employed people who worked remotely at some point fell to 11.6 percent — the lowest level since the pandemic struck — from 13.2 percent in September.

The unemployment rate fell to 4.6 percent from 4.8 percent.

“This was a strong employment report that shows the resilience of the labor market recovery from the pandemic,” said Scott Anderson, the chief economist at Bank of the West in San Francisco. “I think we will see a pretty strong bounce back in economic growth in the fourth quarter.”

While the report was overwhelmingly positive, millions of working-age Americans remain on the sidelines despite the improving economy and employers’ complaints of a shortage of workers. The labor force participation rate — the share of working-age people who have a job or are looking for one — was unchanged last month at 61.6 percent, disappointing hopes that a tighter job market would lure people back to work. Among those in their prime working years — ages 25 to 54 — the rate rose slightly, to 81.7 percent in October from 81.6 percent in September, but was still far short of the prepandemic level.

Prime-age labor force participation improved slightly.

Share of those ages 25 to 54 who are in the labor force (employed, unemployed but looking for work or on temporary layoff)

74

76

78

80

82

84%

Jan. ’20

Jan. ’21

81.7%

Data is seasonally adjusted.

Source: Bureau of Labor Statistics

By Ella Koeze

The stubbornly low participation rate underscores the pandemic’s economic damage and why it will take time to recover despite strong months like October. Total employment is 4.2 million below — and the unemployment rate remains more than a full percentage point above — where it was in February 2020.

Federal Reserve officials initially hoped that the labor market could return to the participation and employment levels that prevailed before the health crisis. The Fed still sees room for improvement, but officials concede that they may have to adjust their expectations.

“The temptation at the beginning of the recovery was to look at the data in February of 2020 and say, ‘well, that’s the goal,'” Jerome H. Powell, the Fed chair, noted during a news conference this week when asked about what constituted full employment.

“I think there’s room for a whole lot of humility here as we try to think about what maximum employment would be,” he later added.

A federal supplement to unemployment benefits expired in early September, and experts are watching for whether the end of that assistance — and a depletion of savings accumulated from other emergency programs — will induce more people to seek work.

The Status of U.S. Jobs

The pandemic continues to impact the U.S. economy in a multitude of ways. One key factor to keep an eye on is the job market and how it changes as the economic recovery moves forward.

Jobs report: The American economy added 531,000 jobs in October, a sharp rebound from the prior month.Analysis: The new jobs numbers present a straightforward, sunny story: Americans are going back to work at a rapid clip.College students in demand: Seniors and graduates are again being sought after as companies revive recruiting, underscoring the economic premium that comes with a diploma.Worker shortages: Missouri scrapped federal pay to the unemployed, saying it kept people out of the labor market. But so far, workers still seem to be choosy.Workers’ increasing mobility: With new opportunities and a different perspective from the pandemic, workers are choosing to leave their jobs in record numbers.

So far, those effects have not matched some analysts’ expectations. Health concerns and child care difficulties have been an impediment, and a surprising number of older workers have decided to retire early.

At the same time, for those in the work force, the resulting labor shortage has provided a measure of leverage that they have not experienced in years.

“For the last 25, maybe 30 years, labor has been on its back heels and losing its share of the economic pie,” said Mark Zandi, the chief economist at Moody’s Analytics. “But that dynamic is now shifting.”

One reflection is in wages, which were up 4.9 percent in October from a year earlier.

Wages are rising rapidly, especially in the hospitality industry.

Percent change in earnings for non-managers since January 2019

Industry (From top to bottom)
Leisure and hospitality

Retail

Business services

Education and health care

Manufacturing

Construction

+5

+10

+15%

2019

2020

2021

All industries

Leisure and hospitality

Manufacturing

Education and health care

Construction

Retail

Business services

Seasonally adjusted.

Source: Bureau of Labor Statistics

By Ella Koeze

“Not only are more Americans working, working Americans are seeing their paychecks go up,” Mr. Biden said Friday.

The rising compensation has also fueled fears of inflation, however, at a time when climbing prices are already diluting the buying power of those gains.

At Bank of America, minimum starting pay has risen to $21 an hour from $19 an hour over the last 24 months, said Mr. Moynihan, the chief executive. “Wage growth has been accelerating,” he added. “We’re fighting to get those jobs filled and our clients are telling us the same thing.”

Beyond finding workers, the supply chain troubles — reflecting the challenge of re-establishing global shipping networks — remain a headache for employers. Automobile manufacturers have been particularly hurt by a shortage of semiconductors, while many companies have been dealing with rising prices for raw materials and transportation.

Understand the Supply Chain Crisis

Card 1 of 5

Covid’s impact on the supply chain continues. The pandemic has disrupted nearly every aspect of the global supply chain and made all kinds of products harder to find. In turn, scarcity has caused the prices of many things to go higher as inflation remains stubbornly high.

Almost anything manufactured is in short supply. That includes everything from toilet paper to new cars. The disruptions go back to the beginning of the pandemic, when factories in Asia and Europe were forced to shut down and shipping companies cut their schedules.

First, demand for home goods spiked. Money that Americans once spent on experiences were redirected to things for their homes. The surge clogged the system for transporting goods to the factories that needed them — like computer chips — and finished products piled up because of a shortage of shipping containers.

Now, ports are struggling to keep up. In North America and Europe, where containers are arriving, the heavy influx of ships is overwhelming ports. With warehouses full, containers are piling up at ports. The chaos in global shipping is likely to persist as a result of the massive traffic jam.

No one really knows when the crisis will end. Shortages and delays are likely to affect this year’s Christmas and holiday shopping season, but what happens after that is unclear. Jerome Powell, the Federal Reserve chair, said he expects supply chain problems to persist “likely well into next year.”

The Commerce Department reported last week that the economy grew by 0.5 percent in the third quarter compared with the prior three months, slower than the 1.6 percent growth in the second quarter. Economists attributed the deceleration to the resurgent pandemic and the supply holdups.

Still, there are reasons to be optimistic. Forecasts suggest growth in the fourth quarter of the year will be better. The Federal Reserve said Wednesday that it would begin winding down the large-scale bond purchases that have been underway since the pandemic struck, signaling that it considers the economy healthy enough to be weaned from the extra stimulus.

The job picture also improved across most demographic groups. The unemployment rate ticked downward for Hispanic and Asian workers, women, and those without a college degree. But Black unemployment was flat at 7.9 percent, nearly twice the rate for white workers.

Black women are lagging the furthest behind their prepandemic employment levels.

Percent change in the number of employed people since before the pandemic, by race, ethnicity and gender

Hispanic men

-20

-10%

April

Jan. ’21

+1.3% since Feb. 2020

15.9 million employed in Feb. 2020

Hispanic women

-20

-10%

April

Jan. ’21

-2.9%

12.4 million

Black men

-20

-10%

April

Jan. ’21

-1.8%

9.2 million

Black women

-20

-10%

April

Jan. ’21

-5.4%

10.5 million

Asian men

-20

-10%

April

Jan. ’21

-0.8%

5.5 million

Asian women

-20

-10%

April

Jan. ’21

+0.5%

4.8 million

White men

-20

-10%

April

Jan. ’21

-2.6%

66.3 million

White women

-20

-10%

April

Jan. ’21

-3.6%

56.9 million

Data for white and Black workers is seasonally adjusted. Hispanic workers may be of any race.

Source: Bureau of Labor Statistics

By Ella Koeze

That racial gap is likely to present a serious test of the Fed’s fresh emphasis on balancing its mandate to control inflation with the goal of “broad-based and inclusive” maximum employment, as officials call it.

“It’s a euphemism, but something the Fed takes very seriously,” said Diane Swonk, the chief economist at the accounting firm Grant Thornton. If the current surge in prices does not abate by early next year, and if both internal and external pressure to prioritize price stability takes precedence, then “patience may run out sooner than people think,” she said — and sooner than Mr. Powell, the Fed chair, would like.

Hiring has seesawed this year along with the pandemic, especially in vulnerable sectors like hospitality and retail, where workers must be face-to-face with customers. Because many white-collar employees can work remotely, they have consistently fared better.

In October, leisure and hospitality employment rose by 164,000, while professional and business services added 100,000 jobs. Despite the supply chain shortages, manufacturers hired 60,000 workers, and transportation and warehousing saw a jump of 54,000.

“We are optimistic,” said Lou Rassey, the co-founder and chief executive of Fast Radius, a Chicago-based company that develops software for manufacturers and makes components for items like medical devices and electric vehicles.

Fast Radius brought aboard about 25 people last month, including factory workers, software developers and technologists. It has actually benefited from the knots in global supply chains. In view of all the trouble that can arise when one link in a chain goes haywire, some U.S.-based industrial customers are moving production closer to home.

“We can produce parts locally that traditionally were made halfway around the world,” Mr. Rassey said.

Jeanna Smialek, Zolan Kanno-Youngs and Ben Casselman contributed reporting.

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