Pandemic Stymies Labor Market Recovery: Live Updates
Pandemic Stymies Labor Market Recovery: Live Updates
To understand what is important about the newest employment numbers, which show that the U.S. economy added only 49,000 jobs in January, Neil Irwin of The New York Times suggests imagining two different varieties of economic downturn:
In one, a handful of industries experience a near-shutdown for reasons beyond anyone’s control, driving millions of people out of their jobs. But most other industries carry on unfazed.
In another, a broad contraction in spending causes job losses across the economy. The story is not so much about one or two industries being devastated as it is about lots of them experiencing moderate pain.
Both scenarios would involve a lot of human suffering, and both would justify government action to help the people affected. But they would have strikingly different implications for government action.
In the first case, you would want to very carefully target aid to enable the people affected to stay on their feet until their industry can reopen. In the second, you would just want to pump money into the economy to stimulate overall demand for goods and services.
In the early phase of the coronavirus pandemic, we saw both types of downturns. But as the year progressed, that changed.
By the end of 2020, you could tell a story in which workers at hotels, airlines, restaurants and performance arenas desperately needed a hand, but most of the rest of the economy seemed comfortably on a path back to full health.
The most recent employment numbers, however, undermined that story. They suggested a stalling, and in some areas a reversal, of progress toward a full recovery even in the segments of the economy not directly affected.
Joblessness remained especially elevated for people of color in January as the pandemic continued to affect sectors where they are more likely to work.
The unemployment rate for Hispanic workers stood at 8.6 percent, exactly double where it was a year earlier. For Asian workers, joblessness was at 6.6 percent, more than twice its 3.1 percent level last January.
Black workers had the highest unemployment rate of any major racial or ethnic group, at 9.2 percent last month, up from 6.1 percent a year earlier. Unemployment for white workers is the lowest, at 5.7 percent, though that is still up significantly compared with 3 percent last January.
The figures underline that although the pandemic’s labor market effects have inflicted widespread damage, workers of color continue to shoulder a heavy burden as labor market weakness drags on.
Asian and Hispanic women’s unemployment rates grew the most
Unemployment rates for Black, Hispanic, Asian and white men
Unemployment rates for Black, Hispanic, Asian and white women
By Ella Koeze·Rates are seasonally adjusted except those for Asian men and women.·Source: Bureau of Labor Statistics
Women have also borne a major share of the pandemic’s economic fallout. The labor force participation rate — which tracks the share of the population either working or looking for jobs — is down 2.1 percentage points from last year for women 16 and older, compared with a 1.8-percentage-point drop for men.
Women may be lingering on the labor market’s sidelines for several reasons. They are more likely to work in service jobs affected by lockdowns and social distancing, and child care duties have fallen more heavily on mothers as the pandemic shutters schools and day care centers, studies have shown.
The Federal Reserve is attuned to those differences as it assesses the job market.
“When we say that the maximum employment is a broad and inclusive goal, what we’re seeing there is we’re not just going to look at the headline,” Jerome H. Powell, the Fed’s chair, said at a news conference late last month. “We’re going to look at different demographic groups, including women, minorities and others.”
As the pandemic recession drags on, more Americans are falling into long-term unemployment — a growing scourge that could threaten not just individual workers but the economic recovery as a whole.
More than four million people in January had been out of work for more than six months, the standard definition of long-term unemployment. That was up slightly from December and almost four times the number before the pandemic began.
The long-term jobless now account for nearly 40 percent of all unemployed workers, the biggest share since the aftermath of the recession of 2007-9. That doesn’t count people who have given up looking for jobs or who can’t work because of child care or other responsibilities.
The long-term jobless got a lifeline in December when Congress extended emergency programs that offer help to people whose regular benefits have expired. But another cliff is coming: Those programs are set to end in March, when there will almost certainly still be millions of people relying on them to pay rent and buy food.
Long-term unemployment continues to rise
Share of unemployed who have been out of work 27 weeks or longer
By Ella Koeze·Seasonally adjusted·Source: Bureau of Labor Statistics
“People still haven’t recovered from the December cliff, so they are just being kept in this constant cycle of panic,” said Stephanie Freed, a laid-off lighting designer who last year started an advocacy group for the unemployed.
Even with aid, however, the long-term jobless could face challenges that endure after the pandemic ends. Economic research has shown that when people are unemployed for extended periods, they have a harder time finding jobs. That — combined with businesses that have likewise faced a prolonged hibernation — could leave lasting economic damage.
“The longer a recession lasts, the more there can be permanent scarring,” said Beth Ann Bovino, the chief U.S. economist for S&P Global Ratings Services. “For those people who are long-term unemployed, those businesses that need to reopen, it takes time. It’s not like switching on and off the light bulb.”
The share of people working or looking for work remained depressed in January relative to its pre-pandemic level, underlining the labor market’s continued weakness.
The so-called labor force participation rate hovered at 61.4 percent last month, the Labor Department said on Friday, little changed from December and down from 63.3 percent in February 2020, just before the crisis took hold. The measure of work force attachment had slumped as low as 60.2 percent last April, and now it seems to have leveled off after rebounding only partway.
People who have left the labor force altogether have still not been replaced
Share of the working-age population who are in the labor force (employed, unemployed but looking for work or on temporary layoff)
By Ella Koeze·Seasonally adjusted·Source: Bureau of Labor Statistics
That so many people remain outside of the work force suggests there is more weakness in the labor market than implied by the slowly declining headline unemployment rate, which tracks only people who are actively applying for work. Continued shutdowns and health concerns could be keeping would-be job seekers on the sidelines.
“The third wave of the virus may have dissuaded some individuals from applying for jobs,” Spencer Hill at Goldman Sachs wrote in a note previewing the report.
For people in their prime working years, classified as 25 to 54 years old, labor force participation came in at 81.1 percent in January. That figure stood at 82.9 percent last February and fell to 79.8 percent during the worst part of the pandemic.
Economists and policymakers are closely watching measures of labor force attachment to gauge how far the job market is from full recovery. After the 2007-9 recession, participation for workers in their prime unexpectedly rebounded as some who were believed to have permanently dropped out of the job market began to look for jobs or take open positions.
“Clearly, we have a ways to go before we get back to the vibrant economy we had on the eve of the pandemic, when the unemployment rate stood at 3.5 percent and there were nearly 10 million more people on payrolls,” Charles Evans, the president of the Federal Reserve Bank of Chicago, said in a speech this week.
Barack and Michelle Obama are getting into business with the “Sound of Metal” and “The Night Of” star Riz Ahmed.
The Obamas’ production company, Higher Ground Productions, is adapting Mohsin Hamid’s critically adored 2017 novel “Exit West” into a movie, which will star Mr. Ahmed, Netflix announced on Friday.
The movie is one of several projects that Netflix said the Obamas were developing for the streaming service. The Obamas signed a multiyear deal with Netflix in 2018 to produce television series, movies and documentaries.
Three years into their deal, Mr. and Mrs. Obama’s efforts have most been focused on documentaries. They acquired the 2019 film “American Factory,” which won the Oscar for best documentary. They also have also produced the documentaries “Crip Camp,” which is about the origins of the disability rights movement, and “Becoming,” a film about Mrs. Obama.
In addition to “Exit West,” the Obamas are also working on a science fiction movie titled “Satellite” with Rian Johnson and Ram Bergman’s production company. They are also planning a documentary about national parks and a scripted series based on a young adult novel by Angeline Boulley that will come out later this year.
Netflix had previously announced that Higher Ground Productions was at work on an animated series for young children and a scripted series adapted from the Michael Lewis book “The Fifth Risk: Undoing Democracy.”
Making television shows and movies is a time-consuming and difficult process, and some projects that are being developed will wind up not getting made. A few projects that the Obamas previously said they were working on — including a drama set in post-World War II New York and a movie about Frederick Douglass — were not part of Friday’s announcements.
“From science fiction to the beauty of our natural world to the relationships that define us, Higher Ground continues to strive for fresh perspectives, compelling characters, and a healthy dose of inspiration,” Mr. and Mrs. Obama said in a statement.
The Labor Department’s report on Friday that the economy added 49,000 jobs in January, while unemployment fell to 6.3 percent, is fueling a push by President Biden and congressional Democrats to pass a $1.9 trillion aid package as soon as this month.
The report showed the economy remains 10 million jobs below its pre-pandemic levels, with sluggish job growth outside of government: The private sector added only 6,000 jobs on net for the month. Revisions to November and December’s jobs data also showed the job market was struggling even more than previously known in the late fall and early winter.
Even the government gains, which were entirely concentrated in state and local education hiring, could be illusory. The department warned in its report that education layoffs caused by the pandemic last year “distorted the normal seasonal buildup and layoff patterns” in education, and possibly made January’s hiring numbers look better than they actually were.
Mr. Biden lamented the jobs numbers before a meeting with House Democrats in the White House to discuss the aid package, saying the 6,000 new private-sector jobs was far too small a figure. “At that rate it’s going to take 10 years before we get to full unemployment.”
“We can’t do too much here, but we can do too little,” he said. “We’ve got a chance to do something big here.”
Mr. Biden, who is set to speak about the economy later on Friday morning, has repeatedly urged Congress to spend aggressively on vaccine deployment, direct aid to individuals and families, expansions of the social safety net and other provisions meant to bring the pandemic to a swifter end and to bridge vulnerable people and businesses to the resumption of normal levels of economic activity.
He and his aides dismissed any sign in the latest report of an economy healing faster than expected and any reason to scale back on plans to provide more help.
The White House Council of Economic Advisers posted a series of messages to Twitter on Friday morning, calling the report “yet another reminder that our economy remains in a hole worse than the depths of the Great Recession and needs additional relief.”
Strong relief is urgently and quickly needed to control the virus, get vaccine shots in arms, and finally launch a robust, equitable, and racially inclusive recovery
— Council of Economic Advisers (@WhiteHouseCEA) February 5, 2021
“Strong relief is urgently and quickly needed,” the council wrote, “to control the virus, get vaccine shots in arms, and finally launch a robust, equitable, and racially inclusive recovery.”
Analysts had been expecting more significant job gains, and they largely called the report a disappointment. “This is not a good start to 2021,” said Nick Bunker, economic research director at the online jobs site Indeed. “Today’s report is essentially the opposite of what we need almost a year into the pandemic.”
Still, some Republicans have argued that the economy is just now starting to reap the benefits of a $900 billion aid package Congress approved in December and that the economy does not need an additional $1.9 trillion jolt. They are likely to point to the drop in the unemployment rate reported on Friday as further evidence that the aid bill should be smaller and more targeted.
Representative Kevin Brady, Republican of Texas, called the jobs report “weak” but said the economy did not need the type of stimulus package that Mr. Biden is proposing.
“Unfortunately, there is little stimulus in the president’s nearly two-trillion dollar ‘stimulus,’” he said. “And unless he begins to work with Republicans in earnest, Americans will suffer tepid job growth as the new normal.”
The top law enforcement officer in the U.S. Virgin Islands accused the executors of Jeffrey Epstein’s estate of mismanagement after a compensation fund established for Mr. Epstein’s sexual abuse victims had to suspend payments.
Lawyers for Denise N. George, the attorney general for the U.S. Virgin Islands, asked the probate judge overseeing Mr. Epstein’s vast estate to temporarily stop the executors from writing checks and selling assets. The motion, filed late Thursday, says that the executors, two former business associates of Mr. Epstein’s, had mishandled the estate’s finances, including by paying certain legal expenses and landscaping costs for Mr. Epstein’s properties.
Earlier Thursday, the independent administrator of the victims’ fund said she had to suspend approving any further settlement payments after the executors told her they did not have sufficient cash to fund the program.
A lawyer for the executors, Daniel Weiner, said his clients believed the liquidity problems were temporary, and blamed liens put in place by the attorney general’s office for some of the delays in selling Mr. Epstein’s properties.
The program has approved about $55 million in payments to victims. About 150 woman have filed claims saying that Mr. Epstein abused them when the were teenagers or young women. The deadline to file claims is March 25.
On Friday, lawyers for two dozen victims with claims still pending joined the attorney general’s motion.
Lawyers for the executors contend that they have been unable to sell many of the estate’s assets, including real estate, because of the pandemic. At the end of last year, the estate reported having $240 million in assets, including $49 million in cash on hand.
Stocks on Wall Street climbed for a fifth consecutive day on Friday, extending a rally that has brought the S&P 500 back to record highs.
The gains continued even after government data showed that U.S. employers added just 49,000 jobs in January, a weak recovery from an outright setback in December. But the rally also reflected expectations for a new stimulus plan, which continues to advance in Congress.
The S&P 500 rose 0.4 percent, adding to a rally of more than 4 percent already this week. It has more than recovered from last week’s drop, when a frenzy by retail traders in “meme stocks” like GameStop and AMC Entertainment unnerved markets. The rebound added up to the market’s best week since early November.
Robinhood, AMC and other “meme stocks”
GameStop jumped about 20 percent, rebounding slightly from their crash this week. Still, for the week, the stock ended down 80 percent.
Friday’s rally came after Robinhood, the online trading app that enraged users when it restricted buying some of the most popular stocks, announced that“there are currently no temporary limits” on buying shares.
AMC Entertainment, another stock that has been the focus of small investors who have egged each other on with social media posts about their trades, fell 3.7 percent Friday. The shares were down about 48 percent for the week.
Most European stock indexes were higher on Friday, with Italy’s still leading the way, as investors expressed confidence in Mario Draghi, the former head of the European Central Bank, forming a new Italian government. The FTSE MIB in Italy has gained more than 6 percent this week, compared with a 2.6 percent gain in the Stoxx Europe 600 index.
Among the winners in the meme-stock frenzy is the Koss family of Milwaukee. The Nasdaq-listed headphone maker that bears their name was swept up in the recent market frenzy, pushing the company’s share price up by nearly 2,000 percent in a matter of days. Koss, like other so-called meme stocks, was singled out by traders because it had attracted a lot of interest from short-sellers, which the buyers hoped to squeeze by bidding up the company’s shares.
Koss insiders sold some $44 million in stock this week, an amount worth more than the company’s entire market cap before crowds of retail traders sent its shares soaring. Michael J. Koss, the chief executive and son of the firm’s founder, sold shares worth more than $13 million, according to a regulatory disclosure. He was joined by other family members, executives and directors in paring their holdings.
The company, founded in 1958, was a pioneer in personal headsets, inventing the first stereo headphone. The company reported around $18 million in revenue in its latest fiscal year, with about a fifth of its sales going to Walmart. It employs just over 30 people directly, in addition to contracting with manufacturers in Asia.
Although executives at other companies at the center of the frenzy, namely GameStop and AMC, haven’t sold shares during the rally, there is nothing untoward legally about the move, provided that the insiders did not have access to private information about the rally. The Reddit-fueled surge in demand was largely conducted in the open, by investors cheering each other on via a public message board.
“As the stock goes up in price, whether it makes sense or not, the people on the end of the short sale suffer,” Craig Marcus, a partner at the law firm Ropes & Gray, told the DealBook newsletter. “People who hold the stock and have the opportunity to sell it and benefit from it, benefit from it.”
Kirin, one of Japan’s biggest breweries, announced on Friday that it would halt a joint venture in Myanmar after the coup earlier this week.
Beginning in 2015, the company set up two brewing companies in Myanmar, hoping to “contribute positively to the people and the economy of the country as it entered an important period of democratization,” Kirin said in a statement on Friday.
But in light of the coup, Kirin decided to exit its joint venture with Myanma Economic Holdings Public Company Limited, it said in the statement, citing the company’s connections to Myanmar’s military. It did not specify a time frame but said it was taking steps “as a matter of urgency.”
Kirin had been under pressure to cut ties with its partner in Myanmar after the release late last year of an Amnesty International report that said the Japanese brewer’s Burmese partner had directed payments to military units implicated in systematic violence against the Rohingya ethnic minority. The report’s allegations could not be independently verified.
In a statement, Amnesty International said Kirin’s decision showed it was “taking its human rights responsibilities in Myanmar seriously.”
Over 400 Japanese companies currently operate in Myanmar, according to data collected by Japan’s external trade agency.
Kuaishou, a short-video app, has captured the eyeballs of people across China. It has also caught the attention of stock pickers in Hong Kong, who nearly tripled the value of its shares in its public debut on Friday.
The app, which offers similar features to Periscope, Snapchat and Instagram, raised $5.4 billion and became the largest initial public offering by a Chinese internet company in Hong Kong. (Alibaba and other Chinese giants that are listed in Hong Kong brought in bigger hauls, but they debuted in New York before issuing secondary listings in Hong Kong.)
The company is now worth $160 billion, a valuation that surpasses that of Wells Fargo. More than 1.4 million individual retail investors in Hong Kong put in orders for Kuaishou shares ahead of its listing, according to a person with knowledge of the offering’s details, demonstrating the appetite for Chinese internet companies.
The video app has a large following outside of China’s high-rise metropolises. It is known for videos that focus on slice-of-life vignettes, often in rural areas. In a country that spends much of its waking hours online, Kuaishou has turned ordinary people like train conductors and welders into celebrities. It has also, at times, caught the attention of China’s censors.
Kuaishou’s fund-raising success is a vote of confidence for Hong Kong’s reputation as a top finance capital. Hong Kong is a part of China that operates under separate laws, but the city faces political uncertainty after a crackdown on a pro-democracy movement and the imposition of a national security law by Beijing.
The city has long served as a bridge between the world and mainland China, and for years has served as a home for multinational companies that relied on its legal protections and free flow of information, features that are not available on the mainland.
Beijing’s increasingly heavy hand in the city’s affairs has undermined some of these assumptions. The decision by Chinese regulators to pull the plug on the initial public offering of Ant Group just days ahead of its planned debut in November added to concerns about the risks of interference by Beijing.