Despite the addition of just 210,000 jobs, the unemployment rate dropped 0.4 percentage points in November. The drop in the unemployment rate went along with an increase in the employment-to-population ratio (EPOP) of 0.4 percentage points, corresponding to a rise in employment of more than 1.1 million in the household survey. The unemployment rate did not drop to this low since the Great Recession, but it was lower in September 2017.
Although the 210,000 job growth in establishment surveys was slower than expected, it is important that it coincided with an increase in average workweek. In November, the index for aggregate hours in public sector increased by 0.5 per cent. This would mean that more than 630,000 jobs were created, with no change to the workweek.
This fits the story of employers who are increasing work hours because they cannot hire new workers. We are witnessing a reshuffling in the labor market. Workers are looking for better jobs, and employers are competing to hire workers, especially in lower-paying areas.
Declines in Unemployment are Largest for Disadvantaged Populations
Nearly all demographics saw a decline in unemployment in November. However the biggest falls were experienced by those who face discrimination in the labor marketplace. Blacks saw their unemployment rate fall by 1.2 percentage points, to 6.7%. This level was not reached after the Great Recession in March 2018 and has never been seen before. Hispanics suffered a decline of 0.7 percentage points to 5.2%.
The unemployment rate of workers without a high-school degree fell by 1.7 percent to 5.7%. The unemployment rate for college graduates fell to 2.3 percent by contrast, just 0.1 percentage point below its pre-pandemic low. The rate of 5.7 percent for workers without a high-school degree is 0.7 percentage point higher than the pre-pandemic low. However, the monthly data are highly irregular.
The unemployment rate for people living with disabilities fell by 1.4 percentage point to 7.7 percent. While the EPOP rose by 1.1% to 21.5 percent. The EPOP rose by 1.1 percentage points to 21.5 percent, almost two percentage points higher than the pre-pandemic peaks. This indicates that the pandemic may have opened up new opportunities for people with disabilities.
The share of long-term unemployment rises
The percentage of workers who report being unemployed for more than 26 weeks has slightly increased to 32.1 percent. It had fallen rapidly from a peak at 43.4 percent in March. It was below 20.0 percent when the pandemic struck. Positively, the percentage of unemployment due to voluntary quitting increased by 1.0 percentage points and now stands at 12.5 percent. This is still a low percentage for a rate of unemployment of 4.2 percent, but the high number long-term unemployed reduces the share due to quits.
For lower-paid workers, wage growth remains strong
The average hourly wage for production workers has increased by 5.9 percent over the past year. It has increased at a 6.6% annual rate when compared to the previous three months (September toNovember) and the three prior months (June through August). The gains for restaurant workers are even greater, with the average hourly wage of production workers up 13.4 percentage year-over-year. However, the annual growth rate slowed to 5.7% comparing the three previous months. Inflation is far outpacing wages for lowest-paid workers.
November: 31,000 new jobs in manufacturing and construction
This continues a trend of strong employment growth in these industries. Construction employment is now down 1.5% from pre-pandemic levels. Manufacturing employment is down 2.0%.
Employment Lagging in Hard-Hit Sectors
However, the hardest hit sectors still have low employment. In November, 3,400 jobs were lost in the motion picture industry. It is now down 21.9 per cent from the pre-pandemic levels.
Low-wage industries are clearly struggling to attract workers. In November, 11,000 jobs were lost by nursing and residential care facilities. This is due to a drop in employment of 423,700 jobs (12.5%) from pre-recession levels. Childcare lost 2,100 jobs, while home healthcare lost 300.
Retail lost 20,400 jobs during November. Retail employment is now down 1.1% from pre-pandemic levels. However the index of aggregate hours has increased 1.1 percent.
Restaurants only added 11,000 workers while hotels added 6,600. The index of aggregate hours for leisure and hospitality (which includes both industries) increased 0.6 percent. This equates to an increase of nearly 800,000 jobs and no change in the workweek.
State and local governments add 27,000 jobs
The number of state and local government employees is down 951,000 or 4.8 percent compared to pre-pandemic levels. This is almost certain to be a supply-side story. These governments are unable to raise their pay to attract workers.
Overwhelmingly Positive Report
This is yet another positive report. The unemployment rate is almost a full percentage lower than the CBO projected before passage of the American Recovery Plan. The most vulnerable workers are enjoying the greatest pay and job opportunities. The economy looks to be very strong as long as another surge in the pandemic doesn’t derail it.