Omicron Surged in January, but So Did the Job Market

January Jobs Report

By Rucha Vankudre, Kyle Rudman and Tim Hatton

The job market is standing strong. Today’s federal monthly jobs report is well above what economists expected: 476,000 jobs were added to non-farm payrolls in January, according to the Bureau of Labor Statistics. Unemployment held steady even as labor market participation ticked up.

Economists were expecting lower numbers based on several factors. Earlier this week, ADP reported private sector employment had decreased by 301,000 jobs from December to January, leading many to expect the BLS report would be similarly bleak. Economists surveyed by the Wall Street Journal expected growth of about 150,000 jobs, and others predicted smaller or even negative growth. There had also been speculation that the surge in the Omicron variant of Covid-19 would have a greater impact. 

Job statistics for December were revised upwards from 199,000 to 510,000, and the November numbers were adjusted upward as well. Those revisions, combined with the strong January report, show that the job market is growing steadily.

Though it appears the new variant didn’t stunt job growth, it affected employment in other ways. According to the report, the share of employed persons who teleworked because of Covid concerns increased to 15.4 percent, the highest level seen in the past six months.

In January, 6 million people said that they had been unable to work because their employer closed or lost business because of the pandemic (meaning they either did not work at all or worked fewer hours due to the coronavirus). That’s a dramatic increase over December, when 3.1 million people reported this had happened. The BLS report found another 1.8 million people were prevented from looking for work due to the pandemic in January, up from 1.1 million in the prior month. 

Even so, a number of industries gained jobs. Accommodation And Food Service saw the most gains, with 131,000 jobs, and Retail Trade added 61,000. Other big winners were Professional And Business Services (+86,000) and Transportation And Warehousing (+54,000).

Looking at demographic trends within the report, we see that the labor force participation rate increased over the previous month for all races except Asians. However, those rates are still below January 2020 levels. 

Meanwhile, unemployment was constant for women and grew slightly for men. Looking at racial breakdown, the rate fell or stayed constant for all races aside from whites. It’s worth noting that these racial and gender disparities persist even in a tight labor market.

Finally, wages went up in January, increasing slightly over December. This indicates a tight labor market and matches a pattern seen in Tuesday’s JOLTS report for December, which showed high numbers of job openings (10.9 million) and quits (4.3 million). 

Taken together, this information shows that employers are still in a tight competition for talent.

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