Employee recruitment picked up pace in October, with U.S. employers adding 531,000 jobs and the unemployment rate falling a fraction of a percentage point to 4.6%, the Department of Labor said on Friday.
Employment growth was widespread and exceeded economists’ expectations. Large increases were seen in the leisure and hospitality, professional and business services, manufacturing, and transportation and warehousing sectors, suggesting a post-pandemic labor market recovery after months of disappointing hiring. In September employers created around 312,000 jobs, according to revised DOL figures released on Friday.
“Overall, it was a really positive job report, but it leaves some questions unanswered about the structure of the job market for the Fed,” Megan Greene, global chief economist at the Kroll Institute consulting firm and senior fellow at Harvard Kennedy School, told ABC News shortly after it was released of the report on Friday.
Greene noted that high-wage, long-hour jobs have been added in the construction and manufacturing sectors, as well as in the service industry – among the hardest hit by the crisis and the slowest to recover.
“I think that just reflects that the Delta variant has been weaned and that the caretakers are probably more confident that the schools are really open and will stay open so they can get back to work,” added Greene. “Well, I think this is all good news.”
“America is back to work,” said President Joe Biden. “Our economy is starting to work for more Americans thanks to the economic plan we pushed through in Congress earlier this year and the successful use of vaccines.”
“Our economy is on the move,” added Biden, and the job is gaining a sign that “we are on the right track”.
Still, the president found the positive numbers did not undermine the need for further spending and took time during his remarks on Friday to outline his plan for Build Back Better.
The labor force participation rate was unchanged at 61.6% in October, announced the DOL and has remained in the narrow range of 61.4% to 61.7% since June 2020.
Greene said this simply means “more people have found work – we haven’t taken anyone off the sidelines of the job market, which the Fed would like to see.”
“I think the question is whether the labor force participation rate will really increase or if we are just facing a structurally different job market,” added Greene after the pandemic.
Employment has increased 18.2 million since the most recent low in April 2020 when the pandemic raged, but remains around 4.2 million, or 2.8%, below pre-pandemic levels. The unemployment rate was at an all-time low of 3.5% in February 2020.
According to Friday’s data, the leisure and hospitality industry created around 164,000 jobs last month, but employment in the sector is still 8.2% lower than in February 2020.
Other notable job gains were in professional and business services, which added 100,000 jobs in October, including 41,000 in temporary employment, the DOL said. Manufacturing created 60,000 jobs last month and employment in the transportation and storage sectors increased by 54,000.
Additionally, the average hourly wage for all employees rose 11 cents to $ 30.96 last month. A shortage of workers accepting low-wage jobs in the wake of the pandemic shock has been linked to rising wages in recent months as many large companies struggled in the early days of the pandemic to hire staff that were made redundant.
“I think in order to attract workers, some companies need to offer more money,” Greene said. “Average hourly wages have increased, but they have increased a little less rapidly than prices, which means that it affects people’s standards of living, so that’s a problem in general.”
“But there is also a concern that when companies increase their wages, they will pass those costs on to the end user, the consumer, and then they will get higher prices and then the employees will say that we need more income to do this.” To be able to do things, you get more wage increases and you end up in this wage-price spiral, “she added.
It was too early to say whether this was a singular incident or part of a larger trend, Greene warned, saying that wage increases would not be a problem unless they are in the Goldilocks scenario, where people’s living standards are due to a higher level Productivity growth increases. “
Disparities still lurk in the recovery. The unemployment rate for black workers was almost twice that of white workers last month – 7.9% versus 4%. The unemployment rate for Hispanic workers was 5.9% and that of Asian workers was 4.2%.
“There is no doubt that there has been great inequality during this pandemic,” said Greene, “and I think that is reflected in some of the racial and ethnic data in the job report.”
This is important for the Fed and policy makers, she added, as they strive for full and inclusive employment.
Finally, the DOL data suggests that some companies called employees back to the office after the vaccine was rolled out. According to DOL, 11.6% of the workforce was teleworking last month due to the pandemic, up from 13.2% in September.
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