Job growth slowed dramatically in November, although there were hopeful signs that the economy is improving on other fronts from its pandemic lows.
According to the Labor Department, the U.S. economy added 210,000 jobs—far less than the 573,000 the Dow Jones had estimated.
At the same time, the unemployment rate dropped from 4.6% to 4.2% and labor force participation increased to its highest levels since March 2020.
Hopes were higher because the government finally began to ease perverse pandemic-related policies, such as undoing the changing or temporary waving of requirements to qualify for unemployment insurance (UI).
Flush with cash through the Coronavirus, Aid, Relief and Economic Security Act (CARES Act), states could provide UI to individuals who weren’t previously eligible. However, this change maintained high unemployment and wage inflation.
Shining a bright light on the nation’s UI program, the Peter G. Peterson Foundation explains the challenges confronting lawmakers in Washington:
Since the expiration of the COVID-related changes to UI, federal spending on the program has fallen significantly. Federal outlays on UI dropped by 83 percent over the past two months, from $30 billion in August to $5 billion in October. Even before then, outlays had been decreasing as several states withdrew from the enhanced programs before the September expiration and as states began to slowly reinstate work search requirements. Overall, the return to normal spending levels has been significantly quicker than it was after the Great Recession, when such spending took nearly four years to return to the pre-recession average of $3 billion.
Nevertheless, unemployment remains higher than pre-pandemic levels. Policymakers should work to understand how the program could effectively deliver necessary support to those in need in an efficient manner.
“This report is a tale of two surveys,” said Nick Bunker, economic research director at jobs placement site Indeed. “The household survey shows accelerating employment gains, workers returning to the labor force, and low levels of involuntary part-time work. The payroll survey shows a significant deceleration in job growth, particularly in COVID-affected sectors.”
“The underlying momentum of the labor market is still strong, but this month shows more uncertainty than expected,” he added.
Despite the disappointment, the market seemed unaffected by the news.
Meanwhile, reactions from the media were swift: