Surprising job growth 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 US added 379,000 jobs last month, more than double what analysts had expected, and saw the unemployment rate fall to 6.2 percent, the lowest level since March 2020.
While the February employment report showed signs of an accelerated recovery, job gains were just a drop in the bucket compared to the widespread damage that had accumulated in the labor market over the past year. The deceptively low unemployment rate also ignores the millions of Americans forced out of the workforce by COVID-19 and the disproportionate toll that women of color take.
“The numbers are not debatable, they are not questionable, they are not confusing. It is obvious. Millions of Americans have left the workforce, which is not good for our economy and certainly not good for the continued growth of the economy, ”said Michelle Holder, a labor economist at John Jay College in New York.
Employment growth in February was an undeniable improvement from January’s meager 49,000 rise and included signs that companies were gearing up for a post-pandemic economy. The hard-hit leisure and hospitality sector created 355,000 jobs, mainly in restaurants and bars long hampered by coronavirus restrictions.
Yet the remarkable gains in that sector only cover just over a tenth of the 3.5 million jobs in that field claimed by COVID-19 that have yet to be replaced.
In the US, about 9.5 million jobs are still being cut from the start of the pandemic, more than the total decline in employment during the Great Recession, a gap that would take more than two years to fill at the pace of February.
Elise Gould, senior economist at the Economic Policy Institute, calculated that employers should add one more 2.4 million jobs to cover the gains that would have been made if COVID-19 had never derailed the economy.
“Returning to pre-recession levels would not come close to filling the job gap,” she wrote.
The unique toll of the pandemic has also made the unemployment rate – the number of people who cannot 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 labor market.
According to the February jobs report, more than 4 million Americans have stopped looking for work because of the pandemic, with many leaving the workforce to care for school-aged children, care for sick family members, or avoid contracting the virus. Since the unemployment rate does not apply to those not seeking work, many Americans who would otherwise want to work are not represented in that main figure.
Federal Reserve Chairman Jerome Powell said in a speech last month – when the unemployment rate was 6.3 percent – that the unemployment rate, including lost workers, would be closer to 10 percent.
As the unemployment rate fell slightly in February, the employment rate remained at 61.4 percent, 1.9 percentage points lower than a year ago. The employment to population ratio – the proportion of working-age adults in employment – also remained unchanged at 57.3 percent, down 3.5 percentage points from February 2020.
“This is not to say that the overall unemployment rate is wrong, but simply that a pandemic requires a full picture of the economy to look at the data in multiple ways,” he wrote. Cecilia Rouse
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The unemployment rate often falls during protracted recessions, when eligible workers lose faith in the labor market and are no longer looking for work. While the same dynamics suppressed the unemployment rate during the Great Recession, the pandemic 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 since been responsible for 26 percent of the female workforce dropout. Likewise, a year ago, Hispanic women made up 17 percent of the female workforce, but 27 percent of the women who left.
A total of 2.3 million women and 1.8 million men have stopped looking for jobs, and economists say more help from the federal government will be needed to get them back into the fold.
“Today’s jobs report, combined with previous months’ revisions and the pattern of retail sales, underscore how dependent on federal aid the recovery remains,” wrote Diane Swonk, chief economist at Grant Thornton, who highlighted January’s increase in consumer spending. followed the December aid package is legally signed.
“Much of what was intended for low-wage households struggling with unemployment is expected to expire in mid-March,” she wrote. “We are still in a very deep hole.”
Biden and the Democrats in Congress are trying to pass a $ 1.9 trillion economic relief bill with an extension of extended unemployment benefits before expiring on March 14. While those unemployment programs will expire for a while, the quick payout of another round of incentive checks can help reduce lost income for troubled families.
“This profit is going too slow,” Biden said at the White House on Friday. “We cannot go one step forward and two steps back.”
Economists argue that the US is still poised for a strong rebound once the country achieves herd immunity – possibly in mid-summer – and can return to some semblance of normal life. And while economists recognize that there is light at the end of the tunnel, they say the tunnel could be much longer than it appears now.
‘I expect it [the unemployment rate] to keep going down, whether it’s sharp or not, but I’m concerned about the extent to which we’ll be able to get people back into the US workforce who have pulled out of it, ”said Holder.