UNIDENTIFIED PERSON, BYLINE: NPR.
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CARDIFF GARCIA, HOST:
Hey, everyone. Paddy and Cardiff here. This is THE INDICATOR FROM PLANET MONEY. And today is Jobs Friday.
PADDY HIRSCH, HOST:
That's right. And this morning, the Bureau of Labor Statistics released the Employment Situation Report - that's the jobs report to you and I - for the month of January. And it revealed that the economy created only 49,000 jobs last month. So that is today's PLANET MONEY indicator - 49,000.
GARCIA: This number was worse than economists had expected. And the picture actually becomes even darker If you look at the longer-term trend. Back in August, September and October of last year, the economy was creating almost a million jobs per month on average as the economy recovered from the pandemic recession. But for the last three months, as there was a surge during the winter and coronavirus cases, the economy has been creating only about 29,000 jobs per month.
HIRSCH: So the recovery has not necessarily gone into reverse, but it's fair to say that it has stalled out. But of course, those are just the top-line figures in the report. And here at THE INDICATOR, we like to go behind the numbers. We like to find the indicators that are buried deep inside these monthly reports and to give context to what's really happening in the labor market.
GARCIA: So we have called up three of our favorite labor market experts. These are people who just eat those labor market details for breakfast and who, I guess, you know, drink Jobs Friday charts for their evening cocktail or something. I don't even know what that means.
HIRSCH: Well, I think what it means is we need to have an indicator cocktail. That's what it means.
GARCIA: That's right. And after the break, each of our three guests will share with us one indicator that they have pulled from the report. And they tell us why that indicator explains so much of what's happening now in the labor market.
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GARCIA: OK. First up from our roster of labor market experts is Nick Bunker. Nick is the economic research director for North America at the Indeed Hiring Lab.
NICK BUNKER: So my indicator is the gap between current employment and what we're seeing in February 2020 before the pandemic. So as of January, there are 9.9 million fewer jobs than we saw before the pandemic.
HIRSCH: And those 9.9 million fewer jobs represents a decline of about 6.5% As Nick explains, this is a humongous gap.
BUNKER: That is worse than the absolute depths of the Great Recession.
HIRSCH: Yeah, remember the Great Recession of 2008?
GARCIA: Mm hmm.
HIRSCH: One not to forget. At its worst point in terms of jobs lost, it was still not as bad as where the labor market is right this very moment.
GARCIA: But of course, that is just the overall gap. The damage has not been spread out evenly across the labor market. Some parts were just hit a lot harder than others. And Nick says there are a few industries in particular that account for a huge share of the jobs that are still missing. For example, jobs in the food services and preparation industry. That's basically restaurants and bars.
BUNKER: That industry alone is responsible for about 24% of that 9.9 million jobs gap. But then you add in accommodation - that's basically hotels - and then you add amusements, gambling and recreation - casinos, essentially. And then those three industries alone are responsible for 37% of that total jobs gap.
HIRSCH: And Nick says the concentration of job losses in specific sectors also shows how important it is to get this virus under control. The government's attempts to stimulate the economy through various bills do help limit the damage. But for a full recovery, the pandemic itself must be defeated.
BUNKER: More people can have more money in their checkbooks to go spend at restaurants. But if they're concerned that they might catch a disease while going out to dinner, they're highly unlikely to spend money there. And that means there are highly unlikely to be more people to hire in those positions.
GARCIA: OK. Up next with a jobs report indicator is Heather Long, economics correspondent at The Washington Post.
HEATHER LONG: My indicator is the number of people who dropped out of the labor force. So they stopped looking for work. They didn't get a job. And they just basically quit. And that number was really high - 406,000 people just said, forget it, on even looking for a job in January.
GARCIA: Heather says there could be a few things happening here. One is simply that with the recovery stalling, a lot of people have become less hopeful that there is work out there, so they've just stopped looking. Another thing that might be happening is that the decline in the labor force also reflects the particular challenges of the pandemic.
LONG: And it's this ongoing story of people struggling to balance their work life with caring for kids and dealing with virtual schooling and dealing with COVID cases with family members who are ill. This is the reason we see this dropout.
HIRSCH: And, Heather adds, the specific sectors of the economy that have been damaged the most also means that the people who are most likely to work in those sectors are often the ones most likely to leave the labor force.
LONG: These are the people who are in these low-wage jobs, who are in the restaurant, in the hotels and the travel industry that continues to get hit really, really hard. And of course, these are the people who we know have less savings and we know we really need the extra help right now.
GARCIA: And finally, our last jobs day expert is Adam Ozimek. Adam is the chief economist at Upwork, a jobs posting site for freelancers and businesses. And here is his indicator from the jobs report.
ADAM OZIMEK: I picked the permanently unemployed.
HIRSCH: OK. This term, the permanently unemployed, requires a wee bit of explanation. So every month the government surveys unemployed people to ask them about the nature of their unemployment. And specifically, the government asks people who lost their jobs if they expect to return to work within six months. If so, if they say yes, then they are categorized as temporary job losers.
GARCIA: But if not, then they are classified as permanent job losers. And right now, Adam says a lot of the jobs lost so far are still considered temporary.
OZIMEK: And when the economy sort of wakes back up from the pandemic slump, people can go back to their old jobs but permanent job losers cannot. Their jobs are gone.
GARCIA: And here's what we learned in this morning's jobs report for the month of January.
OZIMEK: There were 3.5 million permanently unemployed individual. It went up a little bit from December, but the more important part is how elevated it remains compared to a year ago, which is 2.2 million.
OZIMEK: Since the pandemic started, an extra 2.2 million people have lost jobs that are not coming back.
GARCIA: Those people, when they want to go back to work, will have to find brand-new jobs. And Adam says this matters because it's harder for businesses to create new jobs than it is to rehire people who are only temporarily laid off. So even if the population gets vaccinated and the economy starts reopening, it's not automatic that people who lost their previous jobs permanently will quickly get hired.
OZIMEK: So even when we have this pretty quick bounce back, that's still a decent-sized recession to dig out of. And that's going to take time. And it's going to take, you know, stimulus.
HIRSCH: And new jobs are created either when new businesses are created or when existing businesses expand their operations. But for that to happen, businesses need confidence in the future of the economy, so that they'll take the chance on forming new relationships with new employees and with new customers.
GARCIA: Which means that in a way, there are two parts to this recovery. One is for the economy to reopen, so that people who lost their jobs only temporarily can get back to work. The second part is a little harder - getting the economy to grow fast enough that people who lost their old jobs entirely can find new ones. Which means, Adam says, that the number of permanent job losers may not start going down for some time.
OZIMEK: And it's not the kind of thing that we could turn around tomorrow even if we wanted to because the economy is shut down, and it's going to be shut down until the virus is going. So, you know, permanent job loss is not going away until the virus goes away.
GARCIA: As usual, we'll post some links and charts related to today's jobs report to npr.org/money. This episode THE INDICATOR was produced by Jamila Huxtable and fact-checked by Sam Tsai (ph). THE INDICATOR is a production of NPR.
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