'Warning Signs Flashing': Job Growth Slows Sharply As Pandemic Takes Toll On Economy

Dec 4, 2020
Originally published on December 6, 2020 11:41 pm

Updated at 9:24 a.m. ET

U.S. employers sharply scaled back their hiring last month as the coronavirus pandemic put new pressure on restaurants, retailers and other businesses.

The Labor Department said Friday that employers added just 245,000 jobs in November, down from a revised 610,000 in October.


The job growth figure was well below expectations. Economists at Wells Fargo had expected the United States to add just 425,000 jobs in November, while other forecasts pointed to just under half a million.

The unemployment rate dipped to 6.7%, from 6.9% the month before, largely because 400,000 people dropped out of the workforce.


So far the U.S. has recovered 56% of the jobs that were lost in March and April, and payroll employment is still 9.8 million below its pre-pandemic levels.

The slowdown in job growth comes as new infections are surging and as Congress wrestles with whether to extend relief measures currently set to expire the day after Christmas.

This week, the United States set a record with more than 100,000 people hospitalized with the coronavirus. More than 200,000 new infections were diagnosed on Thursday, and nearly 3,000 people died that day from COVID-19.

Government restrictions aimed at slowing the spread of the virus forced Cameron Mitchell to shutter nearly 20% of his restaurants last month and to furlough 700 workers. With customers increasingly nervous about eating out, Mitchell's remaining restaurants have suffered a steep drop in sales.

"Our managers are working for reduced pay. Our hourly people are not getting the hours they want or they're laid off," said Mitchell, who operates 55 restaurants in 13 states. "Our company is losing a million to $2 million a month. And we can't sustain for much longer at that pace."

Nationwide, bars and restaurants cut 17,000 jobs last month. The pandemic has taken a toll on other industries as well.

Job listings at the website Glassdoor fell 2.5% between October and November. That was the first such decline since May, and the drop was widespread among different parts of the country and different sectors of the economy.

"That doesn't mean we've gone over the cliff yet," said Glassdoor's senior economist Daniel Zhao. "But there are definitely some warning signs flashing."

The Census Bureau cut another 93,000 temporary workers in November as it wound down its once-a-decade head count. Local governments cut 21,000 jobs in education.

Federal Reserve Chairman Jerome Powell warned lawmakers this week that without federal help, state and local governments are likely to see additional job cuts in the months to come.

"State and local governments are one of the very largest employers in the country and they provide those critical services," Powell said. "That was a big part of the story in the slow recovery from the global financial crisis a decade ago."

The slowdown in hiring is especially worrisome for millions of Americans who are out of work and at risk of losing their financial lifeline later this month, when emergency unemployment benefits are set to expire.

Congress has been discussing a possible extension of those benefits, but no agreement has been reached yet.

The holiday shopping season typically creates job opportunities in retail. Zhao said this year, many of those jobs are in warehouses or as delivery drivers, as customers increasingly shift their gift-buying online.

The Labor Department report, which is adjusted for seasonal hiring patterns, shows a net loss of 35,000 retail jobs, but an increase of 145,000 jobs in transportation and warehousing.

While there are some openings in traditional brick-and-mortar stores, they may not be easily filled.

"Even in a time of high unemployment, workers are hesitant to return to in-person roles where the health risks might be higher," Zhao said.

New vaccines offer hope that the pandemic could be tamed sometime next year, but widespread distribution of the shots is still months away.

"The good news is, we know recovery is on the way with the vaccines," said Mitchell, the restaurant operator. "We just need to get from here to there, and Congress needs to help provide that bridge."

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Can you fix the economy without defeating the virus? New job numbers out this morning suggest the answer is no. Job growth slowed sharply last month as the pandemic picked up pace. The Labor Department said this morning that employers added just 245,000 jobs in November. That's less than half as many as the month before. NPR's chief economic correspondent Scott Horsley joins us now. Hi there.

SCOTT HORSLEY, BYLINE: Good to be with you, Lulu.

GARCIA-NAVARRO: Scott, forecasters had expected a drop-off in hiring last month, so this is not not expected. But this is a steeper drop than most predicted. What happened?

HORSLEY: Yeah. The job growth is really nearing stall speed in the U.S., especially in industries that require face-to-face contact. Bars and restaurants cut 17,000 jobs last month. Retailers shed 35,000 workers. We saw a general slowdown of hiring in most industries with the exception of health care. There was also a surge in warehouse and transportation hiring. And that shows that people aren't necessarily avoiding holiday shopping this year. They're just doing most of it online.

We also saw a decline in November in government jobs, some of which was expected. Ninety-three thousand temporary census workers were laid off last month as the headcount wound down. And another 21,000 local government jobs were cut in education. That likely reflects support staff in schools that have been close to in-person learning.

GARCIA-NAVARRO: So we've seen job growth dropping steadily now for five months. Where does this leave the overall economy?

HORSLEY: With a long way to go, I'm afraid. Of the 22 million jobs that were lost back in the spring, we have recovered now 56%. That's positive. But it does mean there's still 9.8 million fewer people in payroll jobs now than there were before the pandemic. And the steady decline in job growth suggests that the climb out of the hole is getting steeper. You know, the people who could easily go back to work have already done so, while the people who are now unemployed face a long road home, especially as the pandemic itself is getting worse. And that's forcing...


HORSLEY: ...New restrictions on businesses. And it's making consumers more nervous about going out and spending money.

GARCIA-NAVARRO: Scott, explain this, though. The unemployment rate actually fell in November.

HORSLEY: Yeah. But the only reason the jobless rate fell last month was because 400,000 discouraged workers dropped out of the labor force. Unemployment has fallen sharply from its peak of nearly 15% back in the spring. But last month's drop was not for the reasons we like to see. Overall, the rate at which people are participating in the workforce right now is still about 2% lower than it was before the pandemic. And that means there's a lot of productive capacity in the economy that is just stuck on the sidelines until we get hold of this pandemic.

GARCIA-NAVARRO: And I guess what these numbers really mean is that the need continues in this country. And yet Congress continues to debate extending jobless relief measures. There was some movement this week, but still no agreement. What will happen if we don't get a deal?

HORSLEY: If we don't get a deal, millions of jobless workers are about to lose their unemployment benefits right after Christmas. Now, this gloomy report may add some fresh urgency to those talks going on here in Washington, because it's clear that all the people who are out of work are not suddenly going to find jobs between now and the end of the year. In fact, a lot of forecasters say, with the case counts and hospitalizations soaring, December's jobs report could be worse than November's. Now, we do have, you know, promising news about these vaccines. And that offers hope for a much better economy in the spring or maybe the summer. But first, we have to get through this dark winter. And this report shows a lot of people are going to need help with that.

GARCIA-NAVARRO: A dark winter, indeed.

NPR's chief economics correspondent Scott Horsley. Thank you very much.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.