Employers add only 49,000 jobs as unemployment falls to 6.3%

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As David Spatafore looks at COVID-19-depressed economics, he sees good times just ahead.

“Our plan right now is to kind of shoot in the summer to be like the roaring 20s,” said San Diego restaurant owner Blue Bridge Hospitality.

Pent-up demand after nearly a year of social distancing and lockdowns has created a huge reservoir of consumer demand, he believes, and hungry customers will soon return.

But there’s a catch: Spatafore doesn’t expect to hire all of the nearly 400 employees he had at the top of his business before the new coronavirus hit.

Many economists agree with Spatafore – on both points: the revival of the economy by Labor Day, but after an initial outburst of employment, a darker outlook for jobs.

On Friday, the pandemic’s ability to throw formerly self-sufficient Americans out of the job market was again demonstrated on a nationwide scale, as The Labor Department released a new round of job data.

Despite some prevalence of new cases of coronavirus and a wave of hope as the Biden administration pressed for accelerated vaccinations, job growth declined broadly in January for the second month in a row.

The economy added a modest 49,000 jobs last month after losing 227,000 in December. The nation’s unemployment rate fell to 6.3% from 6.7%, but that was largely due to hundreds of thousands of people dropping out of the workforce. Several workers were hit by permanent layoffs last month, and 40% of the 10 million officially unemployed have now been out of work for more than six months.

The economic impact of the pandemic has sometimes stemmed from government mandates being locked down and the requirements removed, but the more far-reaching effects may involve acceleration and intensified trends already at work.

Although President Biden is relatively successful in tackling the challenges, most analysts expect the recovery on the job side to be long and slow. The stock markets have already jumped back. And the non-partisan Congress Budget Office has expected US economic output to fully recover this summer, but not jobs – not until 2024.

Mark Zandi of Moody’s Analytics predicted that all jobs would return in May 2023, assuming $ 2 trillion in additional fiscal spending – still more than three years for a full recovery.

The pandemic has triggered potentially far-reaching changes in consumer behavior and deep-rooted business models. It has also accelerated changes that were already underway before the coronavirus swept across the country.

Many of these changes can be welcomed, but they will also disrupt the jobs of millions of workers and companies, even as new job opportunities eventually emerge.

Some jobs change from urban areas to more residential areas when more people work from home. The Ministry of Labor said that 23% of employees worked from home in January.

Also likely to survive the pandemic: the rise in online shopping and home delivery from everything from prescription drugs to fresh vegetables and the rise in concert and contract jobs. There may be fewer sales people in the stores, but more representatives from the retail customer service who handle online orders.

And many of the pre-pandemic jobs just do not exist at all.

For several years, Lillian Isabella, an actress and playwright, supplemented her income by playing the role of a patient to help medical students prepare for an exam that tested their bed skills. She is one of hundreds of people across the country who have played “standardized patients” in various programs to prove themselves better doctors.

But last week, after pausing the test of clinical skills during the pandemic, U.S. medical licensors decided to abolish it for good – a painful reminder of how the financial pain of COVID-19 can affect even the smallest nooks and crannies of the economy.

“When it was turned on, it was a pretty good kind of stable work,” said Isabella, 31, who lives in New York.

In San Diego, Spatafore sees some of the same factors at play in his company, which operates half a dozen restaurants, a beach club, dessert shop and a public market.

In March, Spatafore laid off most of its employees and called them one by one. His business survived spring lockdown using family members and a forgivable $ 1.2 million government loan and then got back up to 280 employees last summer before the latest COVID-19 wave slashed its payroll below $ 100.

“It’s been a roller coaster for 11 months,” he said.

Now he is climbing up again, but even though conditions are as they were before the coronavirus outbreak, Spatafore does not see his staff return to pre-pandemic levels. Over the past year, for example, his two pizzerias went from full-service, grocery stores to a self-service front-desk service first out of necessity, but then because the change proved to be a successful model.

“We are not coming back, which means we would not hire waiters and waitresses and so many busboys,” he said.

In January, employment in the United States went nowhere in restaurants and bars and now accounts for nearly a quarter of the jobs not yet restored.

Other leisure and travel-related jobs also remain deep in the hole. The hotel industry was shaken after Microsoft co-founder Bill Gates’ prediction In November that more than 50% of business travel is lost in the ensuing pandemic.

Some hoteliers are talking about possibly only cleaning premises on request – and for a fee – which is likely to cut down on the need for household workers, said Robert Cole, senior analyst at Phocuswright, a travel market research firm. Other hotels now use non-contact check-in and check-out.

“It will be adjustments and starts and a very uneven path,” Cole said of hiring and restoring hotel employment and business.

The retail landscape is also changing. Employment in stores in January remained around 330,000 shy from the level of the year ago, but there have been almost as many new jobs in warehousing and delivery services over the past year.

At Comfort One Shoes, the retail shoe chain in Washington, DC, sales last year were approx. half of what they were in 2019, said Garrett Breton, the company’s president. But online revenue rose more than 120%.

He has 45 employees at the moment and projects that it will go up to around 75 when things return to normal compared to more than 100 before the pandemic, partly due to hits to traditional shopping areas.

“I think the city center is deeply scarred and will not return just because people are vaccinated,” he said.

Jed Kolko, chief economist at the online job site, actually expects employment in most sectors to return, but the long-term outlook for some is fraught with several risks.

“Some of the biggest unknowns about what happens after the pandemic are how big some of these shifts will be – from personal retail to delivery, from office to telework, from service costs to various goods,” he said. “Some of it may be permanent.”

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