We have no idea what 2021 has in store for us. Many people feel that the world will not be "normal" again until COVID-19 is far behind us. Thankfully, the year started off on a good note, with unemployment dropping slightly, from 6.7% to 6.3%. Though the numbers are small, they are positive—good news after the grim drop we experienced in the month of December. However, we will need better news than this to see a real and sustained economic recovery.
January saw 49,000 jobs added to the U.S. economy. As you can see in the graphs above, this continues a downward trend from the high point in March and April. But the rate of change has slowed considerably since then—December actually saw the first loss in jobs in eight months.
The drop in unemployment in January can be explained by two factors: 1) people getting jobs (certain industries saw gains more than others, as we explain below) and 2) people pausing their job hunt, and thus no longer being classified as "unemployed."
Job gains for the month were mostly seen in professional & business services and education. Temporary help services accounted for most of the gains in business, so we'll see how well that bodes for February's numbers. In the education sector, the seasonal buildup and layoff cycle that typically occurs was flipped on its head due to the pandemic. Many job gains occurred in local government education, state government education, and private education. Wholesale trade and mining saw gains, too. However, many of these job gains were offset by losses in leisure & hospitality, retail, healthcare, and in transportation & warehousing.
The unemployment rate for adult men, adult women, Whites, and Hispanics fell slightly this month. It remained mostly unchanged for teenagers, Blacks, and Asians. January also saw fewer reentrants to the labor market than in months prior.
This month's household survey data showed that:
23.2 percent of employed people worked from home in some fashion due to the pandemic, down slightly from December.
14.8 million people reported that they had been unable to work because their employer closed or lost business due to the pandemic. This number is 1.1 million lower than in December.
The number of people not in the labor force in January were prevented from looking for work due to the pandemic remained fairly unchanged at 4.7 million people.
10.1 million Americans remain unemployed as we end the first month of the new year. Many economists agree that this small increase in jobs is negligible in the grand scheme of things. We are hopeful for a stronger February and that, almost a year after the pandemic made its way into the United States, we will see real recovery soon.
Talroo will continue to research and report on how the economy is doing, especially in the COVID era. In the mean time, read up on our research, resources, and reflections over the past year.