It is generally considered bad journalism to start an article like this, but it should be said: The Number of new jobs The Labor Department released on Friday morning does not matter.
These numbers can sometimes be insignificant in the sense that any economic report provides only a partial view of what is going on, and is subject to a margin of error and future modifications.
But in this case it is much more than that. This jobs report is inconsistent because the economy is at a critical inflection point – what has happened in the last few weeks does not matter, but where things expire several weeks from now.
The report said that 379,000 jobs were added in February and the unemployment rate fell to 6.2 percent, which is good news. This is a better result than the one recorded in January, and better than the forecast.
But the economy is still in a deep hole, with nine million fewer jobs than a year ago, or about 12 million shy of where we would be if pre-epidemic job growth occurred during the previous year.
For a simpler model of today’s economy, think of it this way: a huge, complex assembly line has been closed for a year, and is now being commissioned back. Different stations on the assembly line are coming back at different speeds. Currently the number of end products closing the assembly line is less important than the progress details that all the various stations are making (or not) towards returning to full capacity.
In normal times, the total employment benefits stated on Friday would be the blockbuster number. But at that pace jobs will continue to be added, meaning it will still return to pre-epidemic employment levels for two years. The question is whether job creation will accelerate in the coming months as more Americans are vaccinated and begin to resume normal patterns of behavior, especially regarding travel and recreation.
A worrying sign in the number of new jobs: State and local governments are cutting jobs. They cut a total of 83,000 positions, about 69,000 in education.
Will many of these jobs come back if schools are able to work to full capacity by fall? The Biden Epidemic Rescue Plan before the Senate includes $ 130 billion to help schools reopen safely, and an additional $ 350 billion to support state and local government budgets more broadly. If that money proves enough for the job, then the February job cuts could become a temporary whip.
Some areas affected by the epidemic were reported to have large jobs in February, notably a 355,000 increase in leisure and hospitality jobs, most of which were tied to restaurant employment.
That’s good news as far as it goes, but restaurant employment is down 16 percent from its level of last February, a two-million-job hole. Extensive vaccination that enables people to return to the restaurant safely is the only way they will return the job.
News this week that merc will Help build The Johnson & Johnson Coronavirus vaccine is a bigger deal for out-of-work waiters and line cooks than the 286,000 bar and restaurant jobs added in February.
Talk remains clear on the long-term implications of the crisis. The increase in employment in February was entirely driven by people who are no longer on temporary layoffs – the number of these temporarily unemployed workers fell by 517,000 people. The number of permanent job losers remained stagnant at astronomical levels – 2.2 million more than a year ago.
This raises the question what are the jobs that were destroyed during the epidemic. Are there some patterns of behavior and business models that are gone forever? And what will the people working in those businesses do now?
This is the most difficult question about the future. It is easy to describe the route for jobs in schools and restaurants. But true economic health would mean that those 2.2 million people would have to return to the path of employment As well, and that could take more than just a shot in the arm.