The December 2021 jobs report from the Bureau of Labor Statistics showed a 3.9% unemployment rate. Even though that’s undoubtedly a serious undercount, it’s still significant and a definite plus for employee bargaining leverage.
But the report is not as positive as many would like it to be. The job additions from the survey of business and government organizations were very low–just 199,000. That number will increase as more data come in, but the final count won’t be good.
Other concerns? The December report does not reflect the impact of the omicron strain. The report for January will show the effects of more people getting sick and not coming to work. More school kids at home could also depress employment levels. There are already real teacher shortages in the second week of January.
Among other negatives in the Employment Situation (ES) is the fact that while the white unemployment rate fell from 3.7% to 3.2% and the rate for Latinos fell from 5.2% to 4.9%, the African-American unemployment rate rose from 6.5% to 7.1%. The Black teen unemployment rate was down a point but still very high at 21%.
How About Wages?
Wages have been rising over the last year: 5.8% for average workers. That percentage omits the effect of high inflation on buying power. We’ll get the new real earnings report soon, but last month’s issue showed that while hourly wages for average workers rose 5.9% from November to November, consumer prices rose faster. So, the purchasing power of an average hour of work fell 1.6%. It is true that wages in the lowest sector, Leisure and Hospitality, have increased much faster than inflation, but they are still lousy. Yes, $16.97 an hour is 16% over December of 2020, but it is still not so much. And millions of people earn less than the average.
The inflationary surge is harmful in several ways. It eats away at real wages and it may push important reform initiatives to the back burner. Are there effective ways for government officials to deal with it? They can continue to tell people to hang on: high inflation is mainly a supply-chain issue, and things will eventually iron themselves out. But more is needed. The Biden administration should be making it very clear that high inflation and supply-chain issues are evidence of positive policies–government spending that promoted job recovery and also helped people buy a lot of stuff even when they were unemployed. Also, Democrats should strive to legislate individual parts of the Build Back Better program. Renewing the expanded Child Tax Credit could provide a little cushion against higher prices.
When it comes to anti-inflationary programs, some cures are worse than the disease. The Federal Reserve intends to trim the money supply and lift interest rates. Meanwhile, centrist and right-wing politicians resist federal spending for working-class households. But higher interest rates and less federal spending mean fewer jobs, fewer job vacancies, more unemployment, fewer worker quits, and the end of an unusual period of increased bargaining leverage for workers.
Wanted: Seven to Fifteen Million New Jobs
We have not completed the recovery from the Pandemic Recession, and we are miles away from real full employment. Millions of potential workers are still on the sidelines. Even by conventional measures we are seven million jobs short of where we would have been today if we had not had the COVID recession.