Evelyn Reynolds
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U.S. Job Growth Remains Strong, Defying Fed’s Rate Strategy
Employers added 263,000 workers in November, even as some industries showed signs of a slowdown. Wage growth exceeded expectations.America’s jobs engine kept churning in November, the Labor Department reported Friday, a show of continued demand for workers despite the Federal Reserve’s push to curb inflation, largely by tamping down hiring.Employers added 263,000 jobs, even as a wave of layoffs in the tech industry made headlines. That was only a slight drop from the revised figure of 284,000 for October.The unemployment rate was unchanged at 3.7 percent, while wages were 5.1 percent higher than a year earlier, a bigger rise than expected.Those signs of strength perpetuate a strange duality: While a strong labor market may benefit workers in the short term, it could strengthen the Fed’s resolve to raise rates even further, which would increase the likelihood of a recession in 2023.“It upsets some of the narrative going into the report, which was that things are slowing down,” said Neil Dutta, head of U.S. economics at Renaissance Macro. “The reason that this matters for everyone is that the Fed still sees the labor market as the mechanism by which they can solve the inflation problem.”Despite steady employment growth, the impact of higher interest rates is already evident. Hiring in goods-producing sectors like manufacturing and residential construction — which are more sensitive to rising borrowing costs — has slowed substantially, and the number of hours worked fell, mainly because of those industries. But robust hiring in health care and hospitality, where wages have also grown most rapidly, powered continued gains.Wages continue to increase, though still not at the pace of inflationYear-over-year percentage change in earnings vs. inflation More
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Payrolls and wages blow past expectations, flying in the face of Fed rate hikes
Nonfarm payrolls increased 263,000 for the month while the unemployment rate was 3.7%, the Labor Department reported Friday.
The payrolls number was well above the 200,000 estimate, while the unemployment rate was in line.
Average hourly earnings jumped 0.6% for the month, double the estimate, and 5.1% annually versus the 4.6% expectation.Job growth was much better than expected in November despite the Federal Reserve’s aggressive efforts to slow the labor market and tackle inflation.
Nonfarm payrolls increased 263,000 for the month while the unemployment rate was 3.7%, the Labor Department reported Friday. Economists surveyed by Dow Jones had been looking for an increase of 200,000 on the payrolls number and 3.7% for the jobless rate.The monthly gain was a slight decrease from October’s upwardly revised 284,000. A broader measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons edged lower to 6.7%.
The numbers likely will do little to slow a Fed that has been raising interest rates steadily this year to bring down inflation still running near its highest level in more than 40 years. The rate increases have brought the Fed’s benchmark overnight borrowing rate to a target range of 3.75%-4%.
In another blow to the Fed’s anti-inflation efforts, average hourly earnings jumped 0.6% for the month, double the Dow Jones estimate. Wages were up 5.1% on a year-over-year basis, also well above the 4.6% expectation.
The Dow Jones Industrial Average fell as much as 350 points after the report on worries the hot jobs data could make the Fed even more aggressive. However, stocks shaved most of their losses as the trading session neared its close. Treasury yields initially jumped on the jobs news before turning mixed later.
“To have 263,000 jobs added even after policy rates have been raised by some [375] basis points is no joke,” said Seema Shah, chief global strategist at Principal Asset Management. “The labor market is hot, hot, hot, heaping pressure on the Fed to continue raising policy rates.”Leisure and hospitality led the job gains, adding 88,000 positions.
Other sector gainers included health care (45,000), government (42,000) and other services, a category that includes personal and laundry services and which showed a total gain of 24,000. Social assistance saw a rise of 23,000, which the Labor Department said brings the sector back to where it was in February 2020 before the Covid pandemic.
Construction added 20,000 positions, while information was up 19,000 and manufacturing saw a gain of 14,000.
On the downside, retail establishments reported a loss of 30,000 positions heading into what is expected to be a busy holiday shopping season. Transportation and warehousing also saw a decline, down 15,000.
The numbers come as the Fed has raised rates half a dozen times this year, including four consecutive 0.75 percentage point increases.
Despite the moves, job gains had been running strong this year if a bit lower than the rapid pace of 2021. On monthly basis, payrolls have been up an average of 392,000 against 562,000 for 2021. Demand for labor continues to outstrip supply, with about 1.7 positions open for every available worker.
“The Fed is tightening monetary policy but somebody forgot to tell the labor market,” said Fitch Ratings chief economist Brian Coulton. “The good thing about these numbers is that it shows the U.S. economy firmly got back to growth in the second half of the year. But job expansion continuing at this speed will do nothing to ease the labor supply-demand imbalance that is worrying the Fed.
Fed Chairman Jerome Powell earlier this week said the job gains are “far in excess of the pace needed to accommodate population growth over time” and said wage pressures are contributing to inflation.
“To be clear, strong wage growth is a good thing. But for wage growth to be sustainable, it needs to be consistent with 2 percent inflation,” he said during a speech Wednesday in Washington, D.C.
Markets expect the Fed to raise its benchmark interest rate by 0.5 percentage point when it meets later this month. That’s likely to be followed by a few more increases in 2023 before the central bank can pause to see how its policy moves are impacting the economy, according to current market pricing and statements from several central bank officials.
Friday’s numbers had little impact on rate expectations, with traders assigning a nearly 80% probability that the Fed would step down to a half-point increase, according to CME Group data.
“The economy’s big and it takes a long time, many months, for these things to filter through,” Randy Frederick, managing director of trading and derivatives at Charles Schwab, said of the rate increases. “The impact of these rate hikes hasn’t really been felt yet. Powell’s rightfully being a little cautious.”
Powell has stressed the importance of getting labor force participation back to its pre-pandemic level. However, the November reports showed that participation fell one-tenth of a percentage point to 62.1%, tied for the lowest level of the year as the labor force fell by 186,000 and is now slightly below the February 2020 level.WATCH LIVEWATCH IN THE APP More
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The Fed’s path to a ‘Goldilocks’ economy just got a little more complicated
A higher-than-expected payrolls number and wage reading add to the delicate tightrope walk the Fed has to execute.
The numbers would indicate that 3.75 percentage points worth of rate increases have so far had little impact on labor market conditions.
Fed Chairman Jerome Powell earlier this week outlined concerns he has about inflation and the jobs market in particular.
“The inflation outlook, while very uncertain at best, has a path forward that is consistent with a Goldilocks scenario,” Moody’s economist Mark Zandi said.A ‘help wanted’ sign is displayed in a window of a store in Manhattan on December 02, 2022 in New York City.
Spencer Platt | Getty ImagesAs far as jobs reports go, November’s wasn’t exactly what the Federal Reserve was looking for.
A higher-than-expected payrolls number and a hot wage reading that was twice what Wall Street had forecast only add to the delicate tightrope walk the Fed has to navigate.related investing news
In normal times, a strong jobs market and surging worker paychecks would be considered high-class problems. But as the central bank seeks to stem persistent and troublesome inflation, this is too much of a good thing.
“The Fed can ill afford to take its foot off the gas at this point for fear that inflation expectations will rebound higher,” wrote Jefferies chief financial economist Aneta Markowska in a post-nonfarm payrolls analysis in line with most of Wall Street Friday. “Wage growth remains consistent with inflation near 4%, and it shows how much more work the Fed still needs to do.”
Payrolls grew by 263,000 in November, well ahead of the 200,000 Dow Jones estimate. Wages rose 0.6% on the month, double the estimate, while 12-month average hourly earnings accelerated 5.1%, above the 4.6% forecast.
All of those things together add up to a prescription of more of the same for the Fed — continued interest rate hikes, even if they’re a bit smaller than the three-quarter percentage point per meeting run the central bank has been on since June.Little effect from policy moves
The numbers would indicate that 3.75 percentage points worth of rate increases have so far had little impact on labor market conditions.
“We really aren’t seeing the impact of the Fed’s policy on the labor market yet, and that’s concerning if the Fed is viewing job growth as a key indicator for their efforts,” said Elizabeth Crofoot, senior economist at Lightcast, a labor market analytics firm.
Much of the Street analysis after the report was viewed through the prism of comments Fed Chairman Jerome Powell made Wednesday. The central bank chief outlined a set of criteria he was watching for clues about when inflation will come down.
Among them were supply chain issues, housing growth, and labor cost, particularly wages. He also went about setting caveats on a few issues, such as his focus on services inflation minus housing, which he thinks will pull back on its own next year.
“The labor market, which is especially important for inflation in core services ex housing, shows only tentative signs of rebalancing, and wage growth remains well above levels that would be consistent with 2 percent inflation over time,” Powell said. “Despite some promising developments, we have a long way to go in restoring price stability.”
In a speech at the Brookings Institution, he said he expected the Fed could cut the size of its rate hikes — the part that markets seemed to hear as grounds for a post-Powell rally. He added that the Fed likely would have to take rates up higher than previously thought and leave them there for an extended period, which was the part the market seemed to ignore.
“The November employment report … is precisely what Chair Powell told us earlier this week he was most worried about,” said Joseph LaVorgna, chief U.S. economist at SMBC Nikko Securities. “Wages are rising more than productivity, as labor supply continues to shrink. To restore labor demand and supply, monetary policy must become more restrictive and remain there for an extended period.”The path to ‘Goldilocks’
To be sure, all is not lost.
Powell said he still sees a path to a “soft landing” for the economy. That outcome probably looks something like either no recession or just a shallow one, nevertheless accompanied by an extended period of below-trend growth and at least some upward pressure on unemployment.
Getting there, however, likely will require almost a perfect storm of circumstances: A reduction in labor demand without mass layoffs, continued easing in supply chain bottlenecks, a cessation of hostilities in Ukraine and a reversal in the upward trend of housing costs, particularly rents.
From a pure labor market perspective, that would mean an eventual downshifting to maybe 175,000 new jobs a month — the 2022 average is 392,000 — with annual wage gains in the 3.5% range.
There is some indication the labor market is cooling. The Labor Department’s household survey, which is used to calculate the unemployment rate, showed a decline of 138,000 in those saying they are working. Some economists think the household survey and the establishment survey, which counts jobs rather than workers, could converge soon and show a more muted employment picture.
“The biggest disappointment was the strong wage growth number,” Mark Zandi, chief economist at Moody’s Analytics, said in an interview. “We’ve been at 5% since the beginning of the year. We’re not going anywhere fast, and that needs to come down. That’s the thing we need to most worry about.”
Still, Zandi said he doubts Powell was too upset over Friday’s numbers.
“The inflation outlook, while very uncertain at best, has a path forward that is consistent with a Goldilocks scenario,” Zandi said. “263,000 vs 200,000 — that’s not a meaningful difference.”WATCH LIVEWATCH IN THE APP More
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Chinese Solar Makers Evaded U.S. Tariffs, Investigation Finds
The Biden administration pre-emptively halted any penalties from the case in June, prompting critics to say the administration had shortcut its own trade rulesWASHINGTON — U.S. officials have determined that four of eight major Chinese solar companies under investigation in recent months tried to evade tariffs by funneling products into the United States through Southeast Asian countries, in a trade case that has pitted clean energy advocates against domestic solar panel manufacturers.The decision applies to the Thailand operations of Canadian Solar and Trina Solar, as well as BYD Cambodia and Vina Solar Vietnam, according to documents published by the Department of Commerce Friday morning.The ruling centered around esoteric trade laws that aim to protect American manufacturers from unfairly cheap foreign products. But more broadly, the case is related to an increasingly difficult question confronting U.S. policymakers: how quickly the United States can expect to wean itself off China’s supply of materials that are crucial for the American economy, including the solar panels that are needed for a transition to green energy.The investigation, initiated at the request of a small California-based company named Auxin Solar, centered on whether Chinese companies have been trying to bypass tariffs that the United States imposed on cheap solar panels imported from China. In recent years, Chinese solar companies have significantly expanded their manufacturing presence in Southeast Asian countries that do not face the same tariffs.The trade case rests on whether the Chinese companies are actually using these Southeast Asian countries as a significant site of manufacturing, or if they are just making minor changes to products that are largely made in China to try to get around U.S. trade rules.Other companies that were also under investigation — namely New East Solar Cambodia, Hanwha Q CELLS Malaysia, Jinko Solar Malaysia and the Vietnam operations of Boviet Solar — were found not to be violating U.S. trade rules.Typically, companies that are found to be circumventing U.S. tariffs would immediately be subject to higher duty rates to bring their products into the United States. But in an unusual measure, the Biden administration in June pre-empted those higher duties by announcing a two-year pause on any tariff increases on solar products.The administration said its decision to halt additional tariffs would help ensure that the United States has enough solar panels as it tries to reduce its reliance on fossil fuels in the months to come. The Biden administration has set an ambitious goal of generating 100 percent of the nation’s electricity from carbon-free energy sources by 2035, a goal that may require more than doubling the annual pace of solar installations.But domestic manufacturing groups have criticized the president’s decision to halt any imposition of tariffs, saying he is failing to enforce America’s trade rules and crack down on unfair Chinese practices.Solar importers, too, have expressed dissatisfaction with the decision, saying that the two-year pause is not enough time to establish sufficient manufacturing capacity outside China to meet rising U.S. demand.Enormous planned investments in solar energy have raised the stakes of the debate. The Inflation Reduction Act, a sweeping new climate law signed by President Biden in August, provides roughly $37 billion in incentives for companies to produce solar panels, wind turbines, batteries and other crucial minerals in the United States, aiming to reverse the longstanding migration of clean energy manufacturing to China and elsewhere.The clash is the latest chapter in a decade-long conflict between the United States and China over the solar industry. In 2012, the United States began imposing duties on Chinese solar panels, arguing that Chinese manufacturers were unfairly selling their products in the United States at prices below the cost of production. Chinese solar manufacturers shifted their operations to Taiwan instead, but the United States soon expanded its tariffs to apply to Taiwan, as well.In recent years, Chinese companies have set up new manufacturing operations in Southeast Asia, and exports of solar products to the United States from Vietnam, Malaysia, Thailand and Cambodia have exploded. In many cases, these factories appear to rely on raw materials sourced largely from China, like polysilicon.That business model has proved problematic in more ways than one. The U.S. government has found that major Chinese producers of polysilicon and solar products are guilty of using forced labor in the Xinjiang region of China and has banned any products using that polysilicon from the United States.Auxin Solar and other domestic manufacturers have also said that the boom in business in Southeast Asia was an attempt by Chinese companies to evade the duties that the United States had imposed on Chinese products.In a preliminary decision on the case on Friday, officials at the Commerce Department agreed, at least for some cases. The Commerce Department will now require solar companies exporting to the United States from Thailand, Malaysia, Vietnam and Cambodia to certify that a significant proportion of their materials are coming from outside China. Otherwise, companies in those countries will be subject to the same duties paid by their Chinese suppliers starting in 2024. The Commerce Department will continue to review the case and issue its final decision on the matter on May 1, 2023.Mamun Rashid, the chief executive of Auxin Solar, said in a statement that the findings “largely validated and confirmed Auxin’s allegations of Chinese cheating.”“We will continue to press forward in these cases as they continue to make sure all trade cheats are playing by the rules,” he said.Abigail Ross Hopper, the chief executive of the Solar Energy Industries Association, which opposed the investigation, said the group was “obviously disappointed that commerce elected to exceed its legal authority” by ruling against the imports from Southeast Asia.“This decision will strand billions of dollars’ worth of American clean energy investments and result in the significant loss of good-paying, American, clean energy jobs,” she said, adding, “This is a mistake we will have to deal with for the next several years.”Major solar importers have complained for months of difficulties obtaining enough solar panels to meet growing demand for clean energy solutions. George Hershman, the chief executive of SOLV Energy, a large solar contracting firm that has provided engineering, construction and maintenance services for projects across 26 states, said the decision was likely to disrupt an industry that has already been reeling from supply chain constraints in recent years.“The upside is that commerce took a nuanced approach to exempt a number of manufacturers rather than issuing a blanket ban of all products from the targeted countries,” Mr. Hershman said. “While it’s positive that companies will be able to access some of the crucial materials we need to deploy clean energy, it’s still true that this ruling will further constrict a challenged supply chain.”Some members of the Biden administration are sympathetic to these arguments. In a hearing in May before the Senate Energy Committee, Jennifer M. Granholm, the secretary of energy, said the investigation put at stake “the complete smothering of the investment and the jobs and the independence that we would be seeking as a nation to get our fuel from our own generation sources.”The investigation was under the purview of the Department of Commerce, not the Department of Energy, she said. “But I am certainly deeply concerned about the goal of getting to 100 percent clean electricity by 2035 if this is not resolved quickly.”But the Biden administration’s decision to effectively neutralize the trade investigation by halting any additional tariffs that would result from it until June 2024 has also attracted its share of criticism.Along with the small group of solar manufacturers who do not have ties to China, groups that lobby in favor of domestic manufacturing have protested the Biden administration’s taking action in a type of trade decision that is typically independent and quasi-judicial.“This is illegal activity that is directly harming our companies. That’s why we have trade laws,” said Nick Iacovella, the communications director for the Coalition for a Prosperous America, which called Friday for the Biden administration to rescind its emergency declaration halting the tariffs. “There’s absolutely no reason we should allow the Chinese to continue illegal activity for two years.”In a letter to the Biden administration in July, Democratic lawmakers, including Daniel T. Kildee of Michigan, also criticized the decision to pause the tariffs, saying it would undercut “existing and planned domestic solar manufacturing investments, hurting American workers and companies.”Trade remedy laws are one of the only tools available to defend American manufacturers and “should not be undermined,” they wrote.But other lawmakers called on Friday for an extension of the two-year pause on tariffs. Eight Democratic senators, led by Jacky Rosen from Nevada, said solar projects needed access to more basic components to operate.The debate is taking on increasing urgency now that the United States is preparing to make huge investments in its clean energy industry, through bills such as the Inflation Reduction Act.Analysts say it will still take time for the United States to be independent of foreign solar imports. In 2021, the United States had the capacity to manufacture roughly 7.5 gigawatts’ worth of solar modules a year, according to industry figures.In the wake of the passage of the new climate law, several companies have announced plans to increase that capacity by another 20 gigawatts a year over the coming decade, according to ClearView Energy Partners, a Washington research firm.But solar companies are expected to install far more than that — nearly 40 gigawatts worth of solar capacity in 2023, according to government forecasts — spurred on by other tax breaks for solar power in the new climate law. And the country still lacks the capacity to produce solar cells and wafers, key components that are primarily produced overseas.“Therefore, domestic solar panel manufacturers appear likely to rely heavily on an overseas supply chain after” any tariffs are potentially put in place by the end of 2024 as a result of the Commerce Department’s decision, the analysts at ClearView concluded. More
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November unemployment fell for Hispanic workers and Black women, while holding steady overall
The U.S. unemployment rate held steady at 3.7% in November.
The U.S. added 263,000 jobs last month, according to the Labor Department. Economists surveyed by Dow Jones were expecting 200,000 jobs.
Hispanic workers saw the unemployment rate dipped to 3.9% last month, down from 4.2% in October.A Now Hiring sign at a Dunkin’ restaurant on September 21, 2021 in Hallandale, Florida.
Joe Raedle | Getty ImagesThe unemployment rate in the U.S. declined for Hispanic workers and Black women in November, while the overall rate held steady.
Hispanic workers saw unemployment dip to 3.9% last month, down from 4.2% in October, according to the Labor Department on Friday. Unemployment among Hispanic males dropped to 3.5%, from 3.8%, and among women fell to 3.6% from 3.7%. Hispanic youth unemployment (16-19) improved to 11.2% from 12.3%.Black unemployment dropped to 5.7%, down from 5.9%. It fell more for Black women to 5.2%, from 5.8%. Meanwhile, the unemployment rate among Black men ticked higher to 5.4%, from 5.3%. Black youth unemployment worsened, to 16.8% from 16.5%.
More broadly, the U.S. unemployment rate remained unchanged at 3.7% in November, the same level as October, and in line with expectations.Still, the U.S. reported strong jobs growth in November, signaling the Federal Reserve may have further to go in its efforts to cool the labor market. Overall, the U.S. added 263,000 jobs last month. Economists surveyed by Dow Jones were expecting 200,000 new jobs.
“What this report really means is that the Federal Reserve is going to continue along an aggressive track to try to bring the unemployment rate number frankly, up more,” said Michelle Holder, a distinguished senior fellow at Washington Center for Equitable Growth.
“And so, that in the end is not necessarily good for black and Latinx workers, because we know during recessionary periods, these are the workers that are normally the most disaffected.”Notable jobs gains last month in the leisure and hospitality sector drove the decline in the unemployment rate among Hispanic workers, Holder said. Hispanic workers are overrepresented in the sector, which added 88,000 jobs in November.
Meanwhile, strong job gains in health care and government spurred the decline in the unemployment rate among Black women.
To be sure, the lower unemployment rates for both groups are down in part as more Hispanic workers and Black women exit the labor force, a trend that has been exacerbated by the pandemic, according to Holder.
Hispanic workers saw their labor force participation rate fall to 65.7%, down from 66.1%. The rate for Black women dipped to 61.8%, down from 62.2% in October.Meanwhile, the strong headline numbers in the November jobs report masks some weakness in the household survey data, according to Elise Gould, a senior economist at the Economic Policy Institute.
Overall, data showing the number of people employed in the U.S., the employment-population ratio, and participation rates have all ticked lower for at least three straight months.
If what’s happening in the household survey is a better measure, “then it’s actually showing far more economic distress,” Gould said. “And so that means that people are actually losing their jobs and they’re hurting right now.”WATCH LIVEWATCH IN THE APP More
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Here’s where the jobs are for November 2022 — in one chart
The U.S. job market beat expectations again in November, adding 263,000 payrolls led by the service sector.
Leisure and hospitality was the top category for job gains, according to a report from the U.S. Bureau of Labor Statistics, adding 88,000 jobs. Roughly 62,000 of those jobs were in food and drink services, the report said.related investing news
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Health care and social assistance was the second-biggest category last month, adding more than 68,000 jobs. When those groups are combined in a broader category with education, as some economists do, the gains rise to 82,000.
Betsey Stevenson, a University of Michigan professor and former chief economist of the U.S. Labor Department, said on CNBC’s “Squawk Box” that the strength of those sectors show how the economy is still reacting to the impact of the Covid pandemic.
“If you look at where the job growth was in this report, 170,000 of those jobs were in two sectors, sectors where we need people: education and health services, which has barely recovered back to its pre-pandemic level, and leisure and hospitality, which has not recovered back to anywhere near its pre-pandemic level of employment,” Stevenson said.
Government employment also had a strong month, adding 42,000 jobs.
Despite the headline beat and strength in the service sector, there were still weak spots in the economy. The retail trade and transportation and warehousing categories both lost jobs last month.Those declines come as retail and e-commerce companies have struggled with inventory management and the shift in consumer spending after an online shopping boom during the pandemic.
“So we’ve got some sectors that are still in recovery, and other sectors I think that got ahead of their skis,” Stevenson said.WATCH LIVEWATCH IN THE APP More
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Why Are Middle-Aged Men Missing From the Labor Market?
Men ages 35 to 44 are staging a lackluster rebound from pandemic job loss, despite a strong economy.For the past five months Paul Rizzo, 38, has been delivering food and groceries through the DoorDash app. But he spent the first half of 2022 earning no paycheck at all — reflecting a surprising trend among middle-aged men.After learning last Christmas that his job as an analyst at a hospital company was being automated, Mr. Rizzo chose to stay at home to care for his two young sons. His wife wanted to go back to work, and he was discouraged in his own career after more than a decade of corporate tumult and repeated disappointment. He thought he might be able to earn enough income on his investments to pull it off financially.Mr. Rizzo’s decision to step away from employment during his prime working years hints at one of the biggest surprises in today’s job market: Hundreds of thousands of men in their late 30s and early 40s stopped working during the pandemic and have lingered on the labor market’s sidelines since. While Mr. Rizzo has recently returned to earning money, many men his age seem to be staying out of the work force altogether. They are an anomaly, as employment rates have rebounded more fully for women of the same age and for both younger and older men.About 87 percent of men ages 35 to 44 were working as of October, down from 88.3 percent before the pandemic struck in 2020. The stubborn decline has spanned racial groups, but it has been most heavily concentrated among men who — like Mr. Rizzo — do not have a four-year college degree. The pullback comes despite the fact that wages are rising and job openings are plentiful, including in fields like truck driving and construction, where college degrees are not required and men tend to dominate.Economists have not determined any single factor that is keeping men from returning to work. Instead, they attribute the trend to a cocktail of changing social norms around parenthood and marriage, shifting opportunities, and lingering scars of the 2008 to 2009 downturn — which cost many people in that age group jobs just as they were starting their careers.“Now, all of a sudden, you’re kind of getting your life together, and if you’re in the wrong industry …” Mr. Rizzo said, trailing off as he discussed his recent labor market experience. “I wasn’t the only one who dropped out. I can tell you that.”How male employment shifted during the pandemicMen ages 35-44 are working at a notably lower rate than before the pandemic.
.dw-chart-subhed {
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}Change in male employment rate since Feb. 2020 by age group
Note: Three-month rolling average of seasonally adjusted dataSource: Bureau of Labor StatisticsBy The New York TimesHow female employment shifted during the pandemicWomen’s employment has rebounded across age groups..dw-chart-subhed {
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}Change in female employment rate since Feb. 2020 by age group
Note: Three-month rolling average of seasonally adjusted dataSource: Bureau of Labor StatisticsBy The New York TimesMen have been withdrawing from the labor force for decades. In the years following World War II, more than 97 percent of men in their prime working years — defined by economists as ages 25 to 54 — were working or actively looking for work, according to federal data. But starting in the 1960s, that share began to fall, mirroring the decline in domestic manufacturing jobs.What is new is that a small demographic slice — men who were early in their careers during the 2008 recession — seems to be most heavily affected.“I think there’s a lot of very discouraged people out there,” said Jane Oates, a former Labor Department official who now heads WorkingNation, a nonprofit focused on work force development. Men lost jobs in astonishing numbers during the 2008 financial crisis as the construction and home-building industries contracted. It took years to regain that ground — for men who were then in their 20s and early 30s and just getting started in their careers, employment rates never fully recovered. Economists came up with a range of explanations for the men’s slow return to the labor force. After the war on crime of the 1980s and 1990s, more men had criminal records that made it difficult to land jobs. The rise of opioid addiction had sidelined others. Video games had improved in quality, so staying home might have become more attractive. And the decline of nuclear family units may have diminished the traditional male role as economic provider.Now, recent history appears to be repeating itself — but for one specific age group. The question is why 35- to 44-year-old men seem to be staying out of work more than other demographics.Patricia Blumenauer, vice president of data and operations at Philadelphia Works, a work force development agency, said she had observed a dip in the number of men in that age range coming in for services. A disproportionately high share of those who do come in leave without taking a job.Ms. Blumenauer said that age range is a group “that we’re not seeing show up.” She thinks some men who lost their blue-collar jobs early in the pandemic may be looking for something with flexibility and higher pay. “The ability to work from home three days a week, or have a four-day weekend — things that other jobs have figured out — aren’t possible for those types of occupations.”When men don’t find those flexible jobs or can’t compete for them, they might choose to make ends meet by staying with relatives or doing under-the-table work, Ms. Blumenauer said.The pandemic has probably also slowed America’s already-weak family formation, giving single or childless men less of an incentive to settle into steady jobs, said the economist Ariel Binder. On the flip side, disruptions to schooling and child care meant that some men who already had families may have stopped doing paid work to take on more household tasks.“So on the one hand you get these men who are just not expecting to have a stable romantic relationship for most of their lives and are setting their time use accordingly,” Dr. Binder said. “Then there are men who are participating in these family structures, but doing so in nontraditional ways.”Like labor force experts, government data suggest that a combination of forces are at play.A growing number of men do seem to be taking on more child care duties, time use and other survey data suggests. But a shift toward being stay-at-home dads is unlikely to be the full story: Employment trends look the same for men in the age group who report having young kids living with them and those who don’t.What clearly does matter is education. The employment decline is more heavily concentrated among people who have not graduated from college and who live in metropolitan areas or suburbs, based on detailed government survey data.An education gap among menMen without a four-year college degree have returned to work more slowly than others in the same age group..dw-chart-subhed {
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}Change in employment rate for people ages 35-44
Note: Three-month rolling average of seasonally adjusted data.Source: Current Population Survey via IPUMSBy The New York TimesSome economists speculate that the disproportionate decline could be because the age group has been buffeted by repeated crises, making their labor market footing fragile. They lost work early in their careers in 2008, faced a slow recovery after and found their jobs at risk again amid 2020 layoffs and an ongoing shift toward automation.“This group has been hit by automation, by globalization,” said David Dorn, a Swiss economist who studies labor markets.That fragility theory makes sense to Mr. Rizzo.He had seen the Navy as his ticket out of poverty in Louisiana and had expected to have a career in the service until he broke his back during basic training. He retired from the military after a few years. Then he pivoted, earning a two-year degree in Georgia and beginning a bachelor’s degree at Arizona State University — with dreams of one day working to cure cancer.Then the Great Recession hit. Mr. Rizzo had been working nights in a laboratory to afford rent and tuition, but the job ended abruptly in 2009. Phoenix was ground zero for the financial implosion’s fallout.Frantic job applications yielded nothing, and Mr. Rizzo had to drop out of school. Worse, he found himself staring down imminent homelessness. His tax refund saved him by allowing him and his wife to move back to Louisiana, where jobs were more plentiful. But after they divorced, he hit a low point.“I had nothing to show for my life after my 20s,” he explained.Mr. Rizzo spent the next decade rebuilding. He worked his way through various corporate positions where he taught himself skills in Excel and Microsoft SharePoint, married again, had two sons and bought a house.Yet he was regularly at risk of losing work to downsizing or technology — including late last year. The company he worked for wanted him to move into a new role, perhaps as a traveling salesperson, when his desk job disappeared. But his sons have special needs and that was not an option.He quit in January. He watched the kids, posted on his investment-related YouTube channel and watched Netflix. He thought he might be able to live on military payments and dividend income, becoming part of the “Financial Independence, Retire Early,” or FIRE, trend. But then the Federal Reserve raised interest rates and markets gyrated.“I got FIRE, all right,” he said. “My whole portfolio got set on fire.”Mr. Rizzo, who began working for DoorDash in July, making a delivery in Kenner.Emily Kask for The New York TimesMr. Rizzo turned to DoorDash, earning his first paycheck on July 4. While he is technically back in the labor market, gig work like his isn’t well measured in jobs data. If many men are taking a similar path but do not work every week, they might be overlooked in surveys, which ask if someone worked for pay in the previous week to determine whether they were employed.Mr. Rizzo is waiting to see what happens to his DoorDash income in an economic pullback before he rules out corporate work forever. Already, other dashers are complaining that business is slowing as people have spent down pandemic savings.The veteran counts himself fortunate. He knows men in his generation who have struggled to find any footing in the labor market.“It feels like it’s the after-affects of 2008 and 2009,” he said. “Everyone had to restart their lives from scratch.” More
