Economy Adds Jobs Despite the Rise of Omicron Cases 

February 4, 2022 – Employment rose by 467,000 in January as the U.S. unemployment rate edged up to four percent, according to the most recent U.S. Bureau of Labor Statistics report. Employment growth continued in leisure and hospitality, in professional and business services, in retail trade, and in transportation and warehousing. Over the year, the unemployment rate is down by 2.4 percentage points, and the number of unemployed persons declined by 3.7 million. In February 2020, prior to the coronavirus (COVID-19) pandemic, the unemployment rate was 3.5 percent, and unemployed persons numbered 5.7 million.

Among the major worker groups, the unemployment rates for adult men (3.8 percent) and Whites (3.4 percent) edged up in January. The jobless rates for adult women (3.6 percent), teenagers (10.9 percent), Blacks (6.9 percent), Asians (3.6 percent), and Hispanics  (4.9 percent) showed little or no change over the month.

Among the unemployed, the number of job leavers increased to 952,000 in January, following a decrease in the prior month. The number of persons on temporary layoff, at 959,000 in January, also increased over the month but is down by 1.8 million over the year. The  number of permanent job losers, at 1.6 million, changed little in January but is down by 1.9 million from a year earlier.  ”

The labor market has made remarkable progress and by many measures is very strong,” Federal Reserve chair Jerome Powell said during a press conference on Jan. 26. Though he acknowledged the current wave of the virus may weigh on labor force participation in the near-term, he added that, “Over time there are good reasons to expect some further improvements in participation and employment.”

Where Job Growth Occurred

• Employment in leisure and hospitality expanded by 151,000 in January, reflecting job gains in food services and drinking places (+108,000) and in the accommodation industry (+23,000). Since February 2020, employment in leisure and hospitality is down by 1.8 million, or 10.3 percent.

• In January, professional and business services added 86,000 jobs. Job gains occurred in management and technical consulting services (+16,000), computer systems design and related services (+15,000), architectural and engineering services (+8,000), and other professional and technical services (+7,000). Employment in temporary help services continued to trend up (+26,000). Employment in professional and business services is 511,000 higher than in February 2020, largely in temporary help services (+185,000), computer systems design and related services (+161,000), and management and technical consulting services (+151,000).

• Retail trade employment rose by 61,000 in January. Job growth occurred in general merchandise stores (+29,000); health and personal care stores (+11,000); sporting goods, hobby, book, and music stores (+7,000); and building material and garden supply stores (+6,000). Retail trade employment is 61,000 above its level in February 2020.

• Employment in transportation and warehousing increased by 54,000 in January and is 542,000 higher than in February 2020. In January, job gains occurred in couriers and messengers (+21,000), warehousing and storage (+13,000), truck transportation (+8,000), and air transportation (+7,000). All four of these component industries have surpassed their February 2020 employment levels, with particularly strong growth in warehousing and storage (+410,000) and couriers and messengers (+236,000).

• Employment in local government education rose by 29,000 in January but is down by 359,000, or 4.4 percent, since February 2020.

• Employment in healthcare continued to trend up (+18,000) over the month but is down by 378,000, or 2.3 percent, from its level in February 2020.

• Wholesale trade added 16,000 jobs in January, with gains in both durable goods (+11,000) and nondurable goods (+8,000). Employment in wholesale trade is 125,000, or 2.1 percent, lower than in February 2020.

• Employment showed little change over the month in mining, construction, manufacturing, information, financial activities, and other services.

Labor Shortage 

“Due to the clear labor shortage taking place, we have found companies to be more flexible on leadership profiles than once before,” said Travis Hann is managing partner of Pender & Howe Executive Search. “Flexibility in considering candidates with employment gaps, shorter tenure than previously desired and individuals from outside of a desired industry is becoming more normal.”

“Accelerator and incubator programs for start-ups are also seeing more competition than ever before and due to the increased in VC investments, there is no shortage of employment opportunities for professionals to explore,” Mr. Hann said. “It’s partially refreshing to see employers focus more on a candidate’s core competencies, personality, and general work ethic vs where they have been and how long for. It was estimated that 4.3 million Americans quit their jobs in December, that is an astronomical amount and is a clear indicator on how fierce the talent market is. We have not seen any indicators of it slowing down.”

“Employers have assumed that omicron would be painful but short term, so they haven’t changed their hiring plans,” said Mathieu Stevenson, the CEO of Snagajob, a job listings site focused on hourly workers. “Demand from employers is as strong as ever.”

Omicron’s Effect

Nearly nine million workers called in sick in early January, largely because of omicron, Morgan Stanley said, citing Labor Department figures. The variant has proven highly contagious but relatively mild compared to previous COVID strains.

Omicron Posing New Dilemma for C-Suite Leaders
The latest coronavirus headlines are creating chills for many, and with news of Omicron spreading across Africa and Europe, executives worldwide are bracing themselves for the possibility of a severe wave of sickness among their employees. A new Korn Ferry report concludes that the threat of Omicron has created so many immediate challenges that most leaders feel they need to pause, reflect, and then wait. It is counter to how most chief executives have been trained to think. “Everyone is holding their breath while waiting for three pieces of information,” said David Vied, global sector leader of the medical devices and diagnostics practice at Korn Ferry. “What’s the severity of illness? How does Omicron affect different populations? And what is the effectiveness of the vaccines?”

Nearly 80 percent of the idled workers are still counted as employed in Labor’s survey of establishments because they receive paid sick leave benefits, says economist Lydia Boussour of Oxford Economics. But that means as many as 2 million or so may have been dropped from payrolls because they didn’t get a paycheck the week that Labor conducted its survey.

Related: CEOs Leaning on Chief Talent Officers More Often as Talent Issues Dominate the Agenda

Also, six million people said they couldn’t work because their employer closed or lost business due to the pandemic, nearly double the December figure, Labor said.

Yet the sidelined workers likely were at least partly offset by fewer-than-normal year-end layoffs. Many companies are hesitant to let workers go amid widespread labor shortages, Goldman Sachs economist Spencer Hill told USA Today.

Global Employer Confidence

Global employer confidence continues to return as 2022 finds the latest ManpowerGroup Employment Outlook Survey of more than 39,000 employers. Employers in 36 of 40 countries report stronger hiring intentions than the previous quarter with greatest demand for IT talent and hospitality workers. Organizations are also offering more flexibility to overcome talent shortages with employers across all sectors preparing a shift to hybrid working as a pathway to even more flexible working options in the longer term.

“The post-pandemic hiring recovery that has been underway for some time will continue to carry momentum into 2022 with employers predicting strong demand for talent across key sectors,” said Jonas Prising, chairman and CEO of ManpowerGroup. “Companies all over the world need skilled workers to meet their business objectives and fully participate in the economic global recovery. Talent shortages continue and employers are competing with a talent pool that has not full returned to labor markets due to the pandemic. Organizations need to embrace bold thinking on where, when, and how work gets done to meet what workers want while balancing the requirements of business.”

Related: Major Paradigm Shifts Coming Out of the Coronavirus Crisis

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media