Sat, 23 Sep 2023

U.S. unemployment fell in December before Omicron surge

Robert Besser
11 Jan 2022, 21:55 GMT+10

WASHINGTON D.C.: Even though employers only added a modest 199,000 jobs in December, the U.S. unemployment rate fell to a pandemic-low of 3.9 percent.

Despite this drop in the unemployment rate, from 4.2 percent in November, and the slight hiring gain reported by businesses, 651,000 more workers were hired in December, compared with November.

While these figures indicate that employers are struggling to fill jobs positions, many Americans are still reluctant to return to work.

However, data released by the U.S. Labor Department reflected the state of the job market in early December, before the spike in COVID-19 infections began to again disrupt the economy.

Economists warned that job growth could slow in January and February due to Omicron, as millions of newly infected workers are staying at home and in quarantine.

Wages increased considerably in December, with the average hourly wage rising 4.7 percent from one year ago, indicating that companies are competing fiercely to fill their open positions and many workers are quitting to pursue better jobs.

However, inflation could further rise with ongoing low unemployment and rapid wage increases, as companies will raise prices to cover rising labor costs.

"Companies are paying up for workers. This is consistent with inflation well above 2 percent, which keeps the pressure on the Fed to raise interest rates," said Neil Dutta, an economist at Renaissance Macro Research, as quoted by the Associated Press.

Patrick Freeman, 57, a custodian at a furniture factory in Hickory, North Carolina, has benefited from the current situation. In late November, he was given a permanent position after spending two years as a temporary worker, with his wage rising from $12 to $16 per hour.

Becky Frankiewicz, president of the staffing giant ManpowerGroup North America, said many of Manpower's clients are shifting employees from temporary to permanent status, because with workers being scarce, they want to "lock people up."

In addition, Omicron has forced many workers to take sick leave, disrupting businesses ranging from ski resorts to airlines to hospitals.

Alaska Airlines said it is canceling 10 percent of its flights in January because of an "unprecedented" number of employees calling in sick.

According to the reservations website OpenTable, the surge in Omicron infections is likely to affect hospitality workers, restaurants and bars.

But as Omicron is less virulent than previous COVID-19 variants, and few states or localities have implemented new restrictions on businesses, economists say they believe its economic impact will be short-lived.

Omicron, however, might have had some impact on December's data, with the 199,000 new jobs being considerably less than expected.

Many companies are looking past the Omicron surge and still employing core workers. Angie Podolak, director of human capital at Beneficial State Bank based in Oakland, California, said the company, which employs about 195 people, is enjoying strong growth in auto lending and is trying to fill 12 jobs.

Despite workers calling in sick, Podolak said, "It has really just been business as usual for us. I am knocking on wood and crossing my fingers right now. But we have not seen a significant impact on our recruiting."

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