Unemployment Down to 4.2%: Biden Deserves Much Credit
President Biden has created more employment than any other president in history. The Labor Department stated on December 3 that the nation's unemployment rate fell from 4.6 percent to 4.2 percent, indicating that more individuals had jobs.
It must be eating away at former president Donald Trump. Since President Biden was inaugurated, America's unemployment rate tumbled last month to its lowest point since Biden took office and the Covid-19 pandemic struck.
Friday, the government reported that private businesses and other employers added just 210,000 jobs in November, the weakest monthly gain in nearly a year and less than half of October's increase of 546,000. Yet, the whole picture is much brighter.
The Labor Depart release some other data that shows Biden's Administration has a great deal to be proud. The unemployment rate plummeted from 4.6% to 4.2% as a substantial 1.1 million Americans found jobs last month.
While the U.S. economy remains under threat from a spike in inflation, shortages of labor with 11 million job openings, and continued but improving supply change issues. Also remaining the number one issue is the Covid-19 pandemic and the potential impact of the omicron variant of the virus. Yet, for now, Americans are spending freely. The economy is forecast to expand at a 7% annual rate in the final three months of the year, a sharp rebound from the 2.1% pace in the previous quarter, when the delta variant hobbled growth.
Employers in some industries, such as restaurants, bars, and hotels, sharply slowed their hiring in November while job growth remained solid in areas like transportation and warehousing, benefiting from the development of online commerce.
The continuing decline in the unemployment rate was particularly encouraging because it coincided with an influx of a half-million job-seekers into the labor force, most of whom found work. Usually, that number of job seekers would find jobs less quickly and be counted as unemployed until they did.
The large influx of new job-seekers could sign that the labor shortages that have bedeviled many employers since the economy began to recover from the pandemic may be ending. Julia Pollak, the chief economist at online jobs site ZipRecruiter, was quoted as saying…
"That's good news for job seekers and workers, and for businesses too. It looks like the supply constraints are easing a bit with the unemployment rate low and wage growth high."
November's jobs report shows a divergence in two surveys conducted by the government. The unemployment rate is calculated from a survey of households, which found that 1.1 million more people reported that they were employed last month. A separate survey of employers, known as the payroll survey, found that just 210,000 jobs were added last month. This likely means that as many as 790,000 who found jobs never applied for unemployment benefits.
One absolutely positive is the results of the two separate surveys match up over the long run, so showing very different results in a specific month should not be of concern.
The numbers indicate that 6.9 million Americans found jobs in November, not far above the pre-pandemic number of 5.7 million. Keep in mind that the number of unemployed Americans reaches an astounding 18 million at the pandemic's peak.
Another good sign is - average wages have been rising as employers try to attract or keep workers, increasing a strong 4.8% from a year ago.
The biggest issue facing employers has been their struggle with worker shortages because many people who lost jobs in the pandemic have not, for various reasons, returned to the workforce. This appears to be improving, with nearly 600,000 people coming off the sidelines to look for jobs and finding them quickly. The government classifies people as unemployed only if they're actively seeking work.
As a result, the proportion of Americans in the workforce rose from 61.6% to 61.8%, the first significant increase since April. If that much-anticipated development continues, it will mean stronger job growth ahead that the Biden Administration will claim the credit.
Some employers remain cautious about hiring. Restaurants, bars, and hotels added just 23,000 jobs, down from 170,000 in October. That could reflect the effects of an uptick in COVID-19 cases in October and a reduction in outdoor dining. Given the Omicron danger, we may see this sector continue to struggle when the December and January Labor Department reports over the next two to three months.
One concern is brick, and mortar retailers cut 20,000 jobs. This could be the worst possible scenario, a sign that holiday hiring hasn't been as strong as previous years. However, the pandemic may be driving up online sales because transportation and warehousing firms added 50,000 jobs. Online retailers and shippers could set records sales for healthy online shopping.
The emergence of the omicron variant may threaten the jobs outlook for the coming months. At this point, so little is known about omicron, no one can reliably predict that widespread business shutdowns might take place. In addition, even the threat of omicron could discourage a large percentage of Americans from traveling, shopping, and eating out in the coming months. This could slow the economy.
The increase in Americans looking for work is an essential indicator. Even as the jobless rate has steadily declined this year, the proportion of Americans working or searching for jobs has barely budged. The 11 million available jobs prove that there is still a shortage of job-seekers, which is holding back hiring and forcing companies to pay more to hire and keep employees. Higher pay will no doubt sustain spending and growth. But it could also feed inflation if businesses raise prices to offset their higher labor costs, which they often do.
Keep in mind that while there are 11 million job openings, there are now about 3.6 million fewer people with jobs than before the pandemic. One-third of them are now actively looking for work and are classified as unemployed. The remaining two-thirds are no longer job-hunting and aren't counted as unemployed. Suppose more people gain confidence the pandemic is receding. In that case, we could see a significant increase over the next 12 months in the number of people employed.
The Federal Reserve will pay close attention to the proportion of people in the workforce going forward. If that number doesn't rise, it would suggest that the Fed is nearing its goal of maximum employment.
With inflation at a three-decade high and far above the Fed's 2% annual target, reaching its employment mandate would heighten pressure on Chair Jerome Powell to raise interest rates sooner rather than later. Doing so would make loans more expensive for many individuals and businesses. Still, interest rates are near 70-year lows. A rise of 1% or 2% in the next year may generate headlines but may not damage the U.S. economy.
About half of those who have dropped out of the workforce have retired. The other half includes parents, primarily mothers, who stayed home to care for children during closings of schools and daycares. For some of these women, child care remains unavailable or unaffordable. President Biden's $2.1Trillion "Build back better legislation" could go a long way to solving this drag on Americans' availability to return or to go to work. Some other people have become self-employed. And others continue to delay their job hunts for fear of contracting COVID-19.
President Biden delivers remarks on the November jobs report