Pandemic Pricetag: U.S. Employers Cut 140,000 Jobs In December

Jan 8, 2021
Originally published on January 8, 2021 11:22 am

U.S. employers cut 140,000 jobs in December as the runaway coronavirus pandemic continued to weigh on the U.S. labor market.

It was the first monthly job loss in eight months. The unemployment rate held steady at 6.7%.

With thousands of Americans dying from COVID-19 each day, businesses that depend on in-person contact have struggled.

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"The restrictions that we've seen from both governments as well as just the voluntary restrictions where people have been paring back on activity, I think, is really going to weigh on business hiring," said Sarah House, senior economist at Wells Fargo Securities.

Bars and restaurants shed 372,000 jobs in December. The entertainment and recreation industries cut another 92,000 jobs.

At the same time, the warehouse and transportation industries added 47,000 workers, a sign of the rapid growth in online sales. There were also job gains in factories and construction crews, as well as traditional retail.

Despite solid job gains in the summer and early fall, the U.S. has so far recovered less than 56% of the jobs that were lost last spring. There were 9.8 million fewer workers on payrolls in December than in February, before the pandemic took hold.

More people also worked from home in December. The share of people teleworking rose to 23.7% from 21.8% the month before.

The job market is not likely to improve much, as long as coronavirus infections continue to spread rapidly. But with the arrival of new vaccines, forecasters say business conditions should begin to recover once the shots are more widely distributed.

"We're still going to see a subdued pace of hiring as we're waiting for vaccines to roll out," House said. "By the time we get to the second half of the year, though, we're looking for employment to really strengthen.

"The soft patch should be rather temporary," she added.

Last month, Congress approved a $900 billion relief package designed to keep families and businesses afloat while waiting for that recovery. The measure includes one-time, $600 payments to most adults and children, as well as refundable loans for businesses and supplemental unemployment benefits of $300 per week.

The incoming Biden administration has called for additional relief. That's more likely after Democrats clinched both runoff elections in Georgia this week and a razor-thin majority in the U.S. Senate.

Investors are betting that Democratic control in Washington will allow for more federal spending. All three major stock indexes closed at record highs on Thursday.

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While the overall unemployment rate was unchanged in December, unemployment among Latinos increased from 8.4% to 9.3%. The jobless rate for African Americans declined from 10.3% to 9.9%, and the rate for Asian Americans fell from 6.7% to 5.9%.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

NOEL KING, HOST:

This pandemic is absolutely hammering the American job market. A report out from the Labor Department this morning shows U.S. employers cut 140,000 jobs last month. Now, that's the first time we've seen a net loss of jobs since the early days of the pandemic last spring. The unemployment rate, though, is steady - 6.7%.

NPR's chief economics correspondent Scott Horsley's with us. Good morning, Scott.

SCOTT HORSLEY, BYLINE: Good morning, Noel.

KING: Well, so forecasters predicted it would be bad. It's even worse than they expected. What's going on?

HORSLEY: Yeah. This is the price tag of a runaway pandemic. You know, yesterday was the deadliest day we've had so far. Infections are still spreading rapidly. That's led to government crackdowns on business activity. And it's also just made consumers nervous about going out and spending money.

The job losses we saw in December were overwhelmingly concentrated in businesses that depend on face-to-face contact, like bars and restaurants. They lost 372,000 jobs. There were also job losses in entertainment and recreation. These are often low-wage jobs to begin with. So as we've seen throughout the pandemic, the people suffering most are the ones who can least afford it.

KING: OK. Were there any positive signs in the report?

HORSLEY: There were. Some industries that are more insulated from the pandemic are doing OK. Construction, for example, where workers can more easily socially distance - that added jobs. You know, homebuilders have been on a tear. Factories also added jobs.

People who can't travel or go out to dinner and a movie have been spending more money on stuff. And that's keeping factories humming. In fact, some manufacturers say they're having trouble finding enough workers to keep up with booming demand for stuff.

We also saw job gains in transportation and warehousing, which reflects the continued growth of online shopping - and in white collar services. You know, if you're able to work from home, you might be relatively unscarred by this pandemic. And we did see a slight uptick last month in the share of workers who are doing just that.

KING: December was a terrible month. But it did come with a coronavirus vaccine - two of them, in fact. How much of a difference is that going to make in the next couple of months?

HORSLEY: It'll make a difference, but not right away. You know, even...

KING: OK.

HORSLEY: ...In the best-case scenario, it was going to take some time to reach a critical mass of vaccinations. And so far, the rollout has been far from best case.

Still, I talked with economist Sarah House, who's with Wells Fargo Securities. She says, at some point this year, we could be looking at a pretty significant rebound in the job market.

SARAH HOUSE: This off patch should be rather temporary. By the time you get to the second half of the year, we're looking for employment to really strengthen as you see businesses return to some semblance of normal and you have consumers really eager to get out there and spend.

HORSLEY: So certainly, the summer, maybe the spring should be better. But in the winter at least, this is likely to get worse before we see an improvement.

KING: Just briefly, the big pandemic relief package that Congress passed - is that helpful?

HORSLEY: It helps. Yeah. Most importantly, it provides a lifeline for millions of people who are out of work. It extends emergency jobless programs and boosts unemployment benefits by $300 a week. There are also loans for small businesses and those $600 direct payments to people.

You know, President-elect Joe Biden wants to see additional help once he takes office, and Wall Street's betting he's going to get it.

KING: OK. NPR's Scott Horsley. Thanks, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.