Employers add just 199,000 workers in a slow December U.S. employers added 199,000 jobs in December as the unemployment rate fell to 3.9%, marking a second consecutive month of disappointing numbers.

Employers added only 199,000 jobs in December even before omicron started to surge

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A MARTINEZ, HOST:

We got an updated look at the December job market this morning. And for the second month in a row, hiring fell well short of expectations. The Labor Department says U.S. employers added just 199,000 jobs last month. That's fewer jobs than the month before. The unemployment rate, however, fell to just 3.9%. NPR's Scott Horsley is here. Scott, forecasters had been expecting stronger job gains this month. What does this report show?

SCOTT HORSLEY, BYLINE: Yeah. It's kind of meh. One hundred ninety-nine thousand jobs in December is less than half of what forecasters had been expecting. And as you said, this follows a pretty lackluster November jobs report as well. So it hasn't been a good stretch for forecasters. And it's all a little bit puzzling. Now, I should say, job gains for October and November were revised up by a combined 141,000. And we know the government's been having difficulty counting jobs during the pandemic. So there could be more revisions for December as well. But we are seeing a pretty significant downshift in the pace of hiring compared to what we saw in October, for example, and a big drop compared to the booming months in the early summer.

MARTINEZ: So how does the latest pandemic wave affect the jobs picture?

HORSLEY: Well, this report is based on surveys that were taken in the middle of December. So that's before omicron really took hold in the U.S. Certainly, the new variant was in the news at that time. And it's possible that businesses were anticipating this wave even before the case counts really took off. But forecasters think the real impact of the new variant is going to show up in the January jobs numbers. And that impact could be felt in a couple of ways, both in the demand for workers, especially at in-person businesses like bars and restaurants, and also the supply of workers. You know, throughout the pandemic, a fear of the virus has been keeping some would-be workers on the sidelines. And analysts think the omicron variant will add to those fears, at least in the short run.

MARTINEZ: All right. But despite the lackluster job numbers, the employment rate fell. So square that for me.

HORSLEY: The unemployment rate, you mean. Yeah.

MARTINEZ: The unemployment. That's right. Yeah. Sorry.

HORSLEY: Every month, the government does a couple of surveys - one of businesses, which is where the jobs number comes from, and the other of households, which is where we get that unemployment rate. And ordinarily, these two surveys paint similar pictures. But sometimes, they diverge. And for the last couple of months, the two surveys have really been telling kind of different stories. In December, for example, the household survey suggested there were a lot more than 199,000 jobs added, about three times that many. And that's why the unemployment rate fell. Now, I should note, while unemployment was down overall, the jobless rate among African Americans actually rose last month to 7.1%. The other thing people looked to for the household survey is how many people are in the labor market, that is how many people are either working or looking for work. In November, we saw a big jump, as more than 600,000 people came off the sidelines and joined the workforce. December saw a much smaller gain, 168,000. And that's important, A, because we still have about 2.1 million fewer people in the workforce in the country than we did back before the pandemic.

MARTINEZ: Scott, what's happening with wages? What's going on with wages?

HORSLEY: Well, they are climbing. Average private sector wages in December were 5.8% higher than a year ago. In some industries, they're a lot higher. In leisure and hospitality, for example, wages have jumped nearly 16% over the last year. You know, there's a near-record number of job openings. And with more jobs than there are people to fill them, workers are finding increased bargaining power to demand not only higher wages but also better working conditions. And that's, of course, a good thing. It is, however, something the Federal Reserve is keeping a close eye on because if wages keep going up at a rapid rate, that could fuel inflation. And we know inflation's already its highest level in almost 40 years. That big group of people we saw coming into the workforce in November might have given some comfort to the inflation watchdogs at the Federal Reserve. But we didn't see a similar jump in the workforce in December. And that could increase pressure on the central bank to raise interest rates in the months to come.

MARTINEZ: That's NPR chief economics correspondent Scott Horsley. Scott, thanks a lot.

HORSLEY: You're welcome.

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