Is there a labor crisis in America today? It took the U.S. economy about a decade to reach record employment levels during the boom phase of the business cycle. The country is now paralyzed by hysterical state governments, a respiratory illness, and a stimulus-reliant economy that can make it difficult to see how the nation could return to the promised land in 2021. Before a procession is held and the casket is carried to a final resting place, we might come across the fountain of youth and a vaccine to treat despair in the final jobs report of 2020. How did November turn out?
The November Jobs Report
Well, it was not a November to remember for the labor market as employment growth slowed sharply last month amid a resurgence in coronavirus cases and the expiration of several benefits programs.
According to the Bureau of Labor Statistics (BLS), the U.S. economy created 245,000 new jobs in November, below the market forecast of 469,000. This is down from the 638,000 positions added in October. The unemployment rate came in at 6.7%, beating the median estimate of 6.8%. That’s also down from 6.9% in October. Average hourly earnings rose 0.3% in November, average weekly hours were unchanged at 34.8, and the labor force participation rate dropped to 61.5%.
Most of the employment gains were concentrated in transportation and warehousing, with 145,000 new positions. As the industry began preparing for the holiday season, companies added more couriers, messengers, and warehousing and storage workers. Manufacturing payrolls advanced 27,000, while government payrolls shed 99,000.
Overall, this was the slowest monthly job growth since the employment recovery commenced in May.
Initial Jobless Claims
The number of Americans filing for unemployment benefits has declined to a pandemic low, coming in at 712,000 in the week ending November 28. But the Department of Labor also confirmed that 288,701 people submitted claims through a temporary federal-relief benefits program. When you mix federal and state unemployment, initial jobless claims have yet to drop to below one million.
In the months heading into the COVID-19 public health crisis, the weekly reading had hovered between 200,000 and 220,000. When the nation was at the height of lockdowns and restrictions, initial jobless claims exploded at the end of March. Looking at the chart was nothing you had ever seen before.
But were these numbers accurate or a gross exaggeration? The Government Accountability Office (GAO) recently published a report that stated continuing jobless claims, which remain above 5.5 million, have been inflated. The GAO confirmed that double-counting, fraud, and irregular state reporting artificially elevated the measurement.
“Because backlogs in processing a historic volume of claims have led to individuals claiming multiple weeks of benefits at a time for previous weeks of unemployment, as well as other data issues, these traditional estimates have not been appropriate in the context of the pandemic.
Without an accurate accounting of the number of individuals who are relying on [unemployment insurance] benefits in as close to real-time as possible, policymakers may be challenged to respond to the crisis at hand.”
This should have been more significant news than it was, considering that benchmark indexes on the stock market often move up or down based on this weekly snapshot of the U.S. jobs market.
2021: The Sequel to 2020?
Since the 2008-2009 recession, the United States labor market has been resilient. However, it was soon after Inauguration Day 2017 that America’s employment situation improved exponentially, if not only for the resuscitation in the number of full-time jobs being created. Can the U.S. labor market achieve a MAGA moment in the aftermath of COVID-19? So far, only about 12 million of the 22 million jobs lost in March and April have been recovered, and it is going to be an uphill battle for the economy. But with an ultra-expansive Federal Reserve willing to go to any length to rescue the patient from death, and a Congress ready to bleed even more red ink, the battered and beaten body will limp to another economic boom, pumped up with every pharmaceutical on the market, including a coronavirus vaccine.
Read more from Andrew Moran.