Takeaways from a blockbuster January jobs report

Opinion | Takeaways from a blockbuster January jobs report

By Catherine Rampbell

A "now hiring" sign posted outside a gas station in Cranberry Township, Pa., in 2021. (Keith Srakocic/AP)

Including all the annual “benchmark” revisions released by the Bureau of Labor Statistics on Friday, the path of the job market recovery now looks very strong. It’s clearly “v-shaped," a term economists use to describe a rapid downswing followed by a rapid upswing (for reasons that should be evident from the following chart):

Forecasts for January had been pessimistic, with some economists even predicting a decrease in jobs. The White House had been preparing reporters and the public all week for a lousy number. That pessimism was driven by other data suggesting there might be very high levels of absenteeism from work related to the omicron variant. More than 5 million Americans tested positive for covid during the week that the Bureau of Labor Statistics asked about, after all. The expectation was that a lot of those newly-sick people missed work..

So, how come we got this blockbuster report instead?

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For one thing, many of the sick workers still show up as employed in the government’s official data, even if they’re isolating at home, so long as they received paid sick leave or otherwise worked during at least part of the relevant pay period.

And it does look as if a lot of workers were technically employed but not physically at work: 3.6 million, by far the highest number on record. That’s nearly double the number of people absent from work due to illness in January 2021, when vaccines were not yet widely available.

More than 4 million people who usually work full time reported that they instead worked part time during January due to a health-related reason. That’s also a record high. So to some extent, the top-line number of positions added last month obscures just how much omicron actually disrupted the labor market, and employees’ ability to perform their jobs as usual.

Some wacky seasonal factors also helped boost job gains. Usually there are big layoffs in January, when employers that had staffed up for the holidays shrink back down; the Bureau of Labor Statistics makes a “seasonal adjustment” to offset that regular pattern. But that typical seasonal pattern might not have been as pronounced this year. Omicron warped some staffing decisions, and experiences with persistent labor shortages might have motivated some companies to hang on to more of their holiday hires through January.

Note also that even with the recent (very strong) growth, pandemic-sensitive sectors are still nowhere near their pre-pandemic health. Leisure and hospitality had 10 percent fewer jobs (about 1.8 million) on net last month than the sector did in February 2020. Child-care providers are down more than 12 percent (131,000 jobs); the resulting reduced capacity in that industry makes it harder for parents employed in other fields to go back to work.

But all that said: The general pattern of the labor-market recovery is a positive one. The public health crisis continues; thousands of Americans are still dying each day, and many, many more have lost loved ones over the past two years. Families are still struggling with illness, school disruptions and myriad other stresses. But the economy is somehow shrugging off this suffering, with employers and workers finding ways to adapt and muddle through.

Note also that without the recent wave of omicron infections, January’s numbers likely would have looked even better. Since the omicron wave is now receding, there is reason to believe robust hiring will continue in February. It’s possible January will prove to be the month that the pandemic officially lost its stranglehold over the economy, even as it continues to take so much else from us.