Fewer employers, less work spell trouble for job market
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The arrival of the first Friday of December means it’s time for the Labor Department’s latest reports on hiring and unemployment covering November.
It’s been a roller-coaster year for the labor market, with millions of jobs lost early in the pandemic and some of them returning as the economy reopened.
But the pace of job gains has slowed since late summer. And there are some worrying economic signs for the job market going forward.
To get Americans back to work, there has to be more work for them to do.
Payroll processing companies track this; they know from week to week whether employers are scheduling more workers for more shifts. Dave Gilbertson at payroll processor UKG said that, recently, the trend has been going in the wrong direction.
“We saw a consistent slowdown in workforce activity in the month of November,” Gilbertson said.
He said “workforce activity” — the number of employee work shifts — is being dragged down in part by rising COVID cases.
In a typical November, Gilbertson said we usually see “a really big buildup among retailers as they head into their busy season. We were missing retailers this year, and so I think that was felt among hourly employees across the country.”
And it’s employees of small businesses who are most at risk, Gilbertson said. Among companies with a hundred or fewer employees, “10% to 11% of small companies that were around in March are no longer around. They’re businesses that just couldn’t wait it out long enough to survive in this kind of economy.”
Fewer employers and less work to do spell trouble for anyone looking for a job, said Jed Kolko, chief economist at Indeed.
“Look at job postings on our site. Postings are down about 12% below last year’s trend,” Kolko said. “Since August, improvement has slowed down a lot.”
For some job categories that have done well in the pandemic — e-commerce delivery and almost any work that can be done from home — job postings are back to pre-pandemic levels.
Taken altogether, “we’re beginning to see the economy slow down in the fourth quarter,” said Bernie Baumohl, chief global economist at the Economic Outlook Group. “It looks even more concerning for the first quarter.”
Baumohl said the risk will continue to grow the longer the economy goes without more federal aid for small businesses, state and local governments and the unemployed.
“We’re going to be seeing more companies declare bankruptcy, more households in extreme financial crisis, more people being laid off, an even greater divide among income groups,” he said.
Low-income service workers have suffered the most job losses, Baumohl said. And low-wage jobs have been the hardest to get back.
Editor’s note: UKG and Indeed are Marketplace underwriters.
COVID-19 Economy FAQs
What are the details of President Joe Biden’s coronavirus relief plan?
The $1.9 trillion plan would aim to speed up the vaccine rollout and provide financial help to individuals, states and local governments and businesses. Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, while advancing his objective of reopening most schools by the spring. It would also include $1,400 checks for most Americans. Get the rest of the specifics here.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
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