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    Low Unemployment in Nebraska: Workers Thrive, Businesses Cope

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    Harry’s Wonder Bar is a trusted old dive in Nebraska’s capital, frequented by office clerks, construction workers and graduate students alike: the sort of wood-paneled place with a pool table in the back where phones generally stay in pockets, second fiddle to casual conversation, and beer mugs come frosted regardless of the season.As a half-dozen or so happy hour patrons gathered at the bar on a recent afternoon, most had something remarkable in common: Everybody seemed to know somebody who had earned a significant raise, or multiple raises, in the past year — and many, if not all, had received a jump in pay themselves.That included the bartender on the early-evening shift, Nikki Paulk, an easygoing woman with a flash of pink hair. “I’m in hot demand, baby,” she said, mentioning “desperate” employers with a burst of a grin. “I’ve worked at like six bars in the last six months because I just keep getting better offers I can’t turn down.”The unemployment rate in Nebraska was 2.1 percent in February, tied with Utah for the lowest in the nation and near the lowest on record for any state. In several counties, unemployment is below 1 percent. Even taking into account adults who have left the work force, the share of the population 16 and older employed in Nebraska is around 68 percent, the nation’s highest figure.After decades of wage and income stagnation, the seesaw of power between managers and their workers looks to at least temporarily be tilting in the direction of labor, with employers in competition for workers instead of the other way around. Unemployment in states including Indiana, Kansas, Montana and Oklahoma is almost as low as in Nebraska, testing the benefits and potential costs of an economy with exceptionally tight labor markets.Ms. Paulk, 35, graduated from college with a graphic design degree during the Great Recession, when jobs were scarce. She remembers working 60-hour weeks near minimum wage in Illinois, “being excited to find a quarter” that could go toward laundry. In 2013, she moved to Nebraska and took a job in medical data entry for $12 an hour.She started bartending in 2018, and since then, she says, her overall pay has more than doubled to $25 (and sometimes $30) an hour, including tips.The nationwide jobless rate in February was 3.8 percent, nearly back to prepandemic levels that were the lowest in a half-century. The particularly low unemployment in Nebraska is partly attributable to its higher-than-average high school graduation rate, and the dominant role of industries like manufacturing and agriculture that are less volatile than the service or energy sectors during downturns. Even at the peak of Covid-19 lockdowns in the spring of 2020, the state unemployment rate was 7.4 percent, half the national number.Yet the labor market in Nebraska may also be a harbinger for the country at large. Most economists expect overall unemployment to continue ticking downward this year. Job openings are near record highs, and jobless rates in January were lower than a year earlier in 388 of the 389 metropolitan areas evaluated by the Bureau of Labor Statistics.Many business analysts contend that if labor remains scarce, wages will grow too rapidly and employers will continually pass on that increased expense to consumers. At least for now, evidence of such a spiral is sparse: Federal Reserve data shows that median annual pay increases are well within the range — 3 to 7 percent — that prevailed from the 1980s until the 2007-9 recession.The State of Jobs in the United StatesJob openings and the number of workers voluntarily leaving their positions in the United States remained near record levels in March.March Jobs Report: U.S. employers added 431,000 jobs and the unemployment rate fell to 3.6 percent ​​in the third month of 2022.A Strong Job Market: Data from the Labor Department showed that job openings remained near record levels in February.Wages and Inflation: Economists hoped that as households shifted spending back to services, price gains would cool. Rapid wage growth could make that story more complicated.New Career Paths: For some, the Covid-19 crisis presented an opportunity to change course. Here is how these six people pivoted professionally.Return to the Office: Many companies are loosening Covid safety rules, leaving people to navigate social distancing on their own. Some workers are concerned.Unionization Efforts: The pandemic has fueled enthusiasm for organized labor. But the pushback has been brutal, especially in the private sector.The Fed, still concerned, has begun raising interest rates to cool off the economy and tame inflationary pressures. Supply chain challenges that arose during the pandemic have persisted, and the war in Ukraine is further complicating the outlook for inflation as well as overall economic growth. Consumer spending remains buoyant, yet surveys reflect dour economic sentiment among the public.In the meantime, even as price increases nag household budgets, burying the value of some new wage gains, a noticeable mass of employees and job seekers are gaining more leverage regarding benefits and conditions.Tony Goins was appointed by Gov. Pete Ricketts in 2019 as director of Nebraska’s Department of Economic Development.Terry Ratzlaff for The New York TimesDuring a virtual summit about the local economy held in February by the nonprofit group Leadership Lincoln, Eric Thompson, the director of the Bureau of Business Research at the University of Nebraska-Lincoln, argued that the labor market might be simply rebalancing.“Obviously, it’s still always better to be the employer than the worker, or at least usually it is,” he said. But the current environment does enable some employees to switch jobs or more easily vie for higher-level positions. Local employers are dropping degree requirements for a range of midlevel and entry roles.Many fast-food restaurants, struggling to staff locations near the $9 minimum wage in the state, have begun to offer starting wages of $14. Evidence of automation is just as rampant as Help Wanted signs: Some pharmacies dotting the main roads and highways appear to have more self-checkout kiosks than employees at a given hour.Mr. Thompson said such moves were not necessarily ominous for the working class but rather a reflection of the need for businesses to adapt while workers find jobs that can “maximize their skills and potential.”Tony Goins, a former senior vice president at JPMorgan Chase who was appointed by Gov. Pete Ricketts in 2019 as director of Nebraska’s Department of Economic Development, said the tight labor market could prompt managers to become more flexible and innovative.“At the end of the day, the market is dictating that I have to pay employees more money,” said Mr. Goins, a small-business owner himself with a cigar lounge in Lincoln. “So, I mean, how are you going to offset that?” To stay competitive in hiring, he said, managers need to improve culture, leadership, employee retention and recruiting.He spoke of his son, an assistant men’s basketball coach at Boston College — a position that he says requires continued outreach as well as the dual promise of “the chance to play for a winning program” and gaining personal development. “That’s not what C.E.O.s are used to,” he said.Businesses aiming to grow have begun to offer incentives beyond pay. The Japanese company Kawasaki Motors is spending $200 million to expand the 2.4-million-square-foot site in northern Lincoln where it makes Jet Skis, all-terrain vehicles and rail cars. It is increasing its 2,400-member work force by over 500 employees, with jobs primarily in fabrication, welding and assembly.The company is becoming more flexible about hiring and work styles in order to pull it off. “It used to take a couple of weeks to get hired at Kawasaki,” said Bryan Seck, its chief talent management strategist in Lincoln. “Now, it’s down to four hours.”With the knowledge that many parents remain on the sidelines of the work force because of child care duties, Kawasaki recently created a 9 a.m. to 2 p.m. shift tailored for those who need to retrieve children from school and day care in the early afternoon. Starting wages are $18.10 an hour, Mr. Seck said, with benefits including health care and a 401(k) plan.Todd Heyne, the chief construction officer at Allo Communications, a cable company based in Lincoln.Terry Ratzlaff for The New York TimesIn addition to increasing wages to retain employees, Todd Heyne, the chief construction officer at Allo Communications, a cable company based in Lincoln, said management decided that easing in-person work requirements could expand the pool of available workers. That led the company to allow many of its customer service representatives and technical support employees to train and work farther afield as it prepares to expand beyond Nebraska and Colorado.Not all problem-solving is easy. The added labor costs come on top of supply chain pressures that have increased the price of crucial materials like fiber optic cable by as much as 30 percent. Vendors are often charging 20 percent more for their contracted tasks. As a result, the company has taken steps like hiring its own trucking staff.In the end, “combined with some automation efficiencies, our team will see sizable wage increases with less rudimentary work,” Mr. Heyne said, reducing manual paperwork, centralizing back-end systems and doing more to fix customers’ network issues remotely. So despite the cost challenges, “I’ve never been more optimistic about where we’re sitting, our position in the market, how we compete against our competitors, and our technology,” he added. “Which is strange.”For many, the opportunity of this economic moment is tinged with worry. They include Ashlee Bridger, a 30-year-old student at the Lincoln campus of Southeast Community College who works in administration for the nearby firm Huffman Engineering after being recruited from a job fair.Ms. Bridger left her job as a nurse to pursue a career in human resources because she felt confident enough to bet on herself: “Of course, it was a risk. Leaving any career is.” But in the current job market, she said, “I knew I would be able to work my way up easier.”She has also had a series of life milestones fall into place. She will graduate in May with an associate degree and will start bachelor’s degree work in the fall at Nebraska Wesleyan University. The managers at Huffman have told her that she is welcome to continue working there when her schedule allows, and that they would like to hire her in a more senior role after she completes her studies.Last year, she got married in summer, then moved with her husband into a newly built house in Lincoln in August. Though they feel financially stable, she half-joked that they were lucky the home was mostly built before lumber prices soared. With prices up across the board now, “I’m more cautious about my spending,” she said.Ms. Paulk, the bartender at Harry’s thriving off better pay, has friends and customers who are upset about recent inflation. “But it’s something controlled out of our hands anyway,” she said with a shrug.“All I know,” she added, “is now I’m not broke anymore — it’s great. Life is good.” More

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    The Fed Bets on a ‘Soft Landing,’ but Recession Risk Looms

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    Central bankers have been clear that they will do what it takes to control inflation. They are betting on a soft landing, but a bumpy one is possible.Jerome H. Powell, the Federal Reserve chair, emphasized this week that the central bank he leads could succeed in its quest to tame rapid inflation without causing unemployment to rise or setting off a recession. But he also acknowledged that such a benign outcome was not certain.“The historical record provides some grounds for optimism,” Mr. Powell said.That “some” is worth noting: While there may be hope, there is also reason to worry, given the Fed’s track record when it is in inflation-fighting mode.The Fed has at times managed to raise interest rates to cool down demand and weaken inflation without meaningfully harming the economy — Mr. Powell highlighted examples in 1965, 1984 and 1994. But those instances came amid much lower inflation, and without the ongoing shocks of a global pandemic and a war in Ukraine.The part Fed officials avoid saying out loud is that the central bank’s tools work by slowing down the economy, and weakening growth always comes with a risk of overdoing it. And while the Fed ushered in its first rate increase this month, some economists — and at least one Fed official — think it was too slow to start taking its foot off the gas. Some warn that the delay increases the chance it might have to overcorrect.The Fed has touched off recessions with past rate increases: It happened in the early 1980s, when Paul Volcker raised rates in a campaign to bring down very rapid inflation and sent unemployment rocketing painfully higher in the process.“There is no guarantee that there will be a recession, but you have high inflation, and if you’re serious about bringing it down quickly, you have to hike a lot,” said Roberto Perli, the head of global policy at Piper Sandler, an investment bank, and a former Fed economist. “The economy doesn’t like that. I think the risk is substantial.”It is no surprise that it can be difficult to cool down inflation while sustaining an economic expansion. Higher borrowing costs trickle through the economy by slowing the housing market, discouraging big purchases and prompting companies to cut expansion plans and hire fewer workers. That broad pullback weakens the labor market and slows wage growth, helping inflation to moderate. But the chain reaction plays out gradually, and its results can be seen only with a delay, so it is easy to lay on the brakes too hard.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: Times readers sent us their questions about rising prices. Top experts and economists weighed in.Interest Rates: As it seeks to curb inflation, the Federal Reserve announced that it was raising interest rates for the first time since 2018.How Americans Feel: We asked 2,200 people where they’ve noticed inflation. Many mentioned basic necessities, like food and gas.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.“No one expects that bringing about a soft landing will be straightforward in the current context — very little is straightforward in the current context,” Mr. Powell acknowledged during his remarks this week, adding, “My colleagues and I will do our very best to succeed in this challenging task.”Six of the eight Fed-rate-increase cycles since the early 1980s have ended in recession, though some of those were caused by external shocks — like the pandemic — and some by asset bubble implosions, including the 2007 housing crisis and the collapse in internet stocks in the early 2000s.Fed officials are hoping that today’s strong economy will help them avoid a rough landing. They point to the fact that labor markets are booming and consumer demand is solid, so lifting rates and tempering voracious buying might help supply to catch up and chill the economy without giving it freezer burn. Mr. Powell has argued that with so many open jobs per unemployed worker, the Fed might be able to slow down the labor market a bit without pushing the unemployment rate up.Loretta J. Mester, the president of the Federal Reserve Bank of Cleveland, said the Fed was not at a point where it had to decide between fighting inflation or pummeling growth.“Given where the economy is now, and where the risks are, to my mind the major economic challenge is inflation,” Ms. Mester told reporters on a call Wednesday. “I don’t see it as being a trade-off at this point.”James Bullard, the president of the Federal Reserve Bank of St. Louis, said in an interview that he thought the fact that the central bank had credibility as an inflation fighter — and was raising rates to defend that credibility — could allow it to adjust policy in a way that allowed demand to moderate without causing major economic disruptions.A FedEx worker picked up packages in New York this month. After a year of rapid inflation, there is no guarantee that longer-term inflation expectations will stay in check.DeSean McClinton-Holland for The New York TimesIn the 1980s, when Mr. Volcker was the Fed chair, the central bank had to convince the world that it was prepared to wrestle inflation under control after more than a decade of rapid price gains.“Do whatever it takes — I guess that’s the mantra of the day. I do think inflation is our No. 1 concern,” Mr. Bullard said. “I don’t think, however, that it is a Volcker-like situation.”Near-term consumer and market inflation expectations have shot higher over the past year as inflation has hit a 40-year high and continued to accelerate, but longer-term price growth expectations have nudged only slightly higher.If consumers and businesses anticipated rapid price increases year after year, that would be a troubling sign. Such expectations could become self-fulfilling if companies felt comfortable raising prices and consumers accepted those higher costs but asked for bigger paychecks to cover their rising expenses.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    How 6 Workers Built New Careers In the Pandemic

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    When the pandemic struck in 2020, entire industries were decimated overnight, leaving workers to survive on unemployment benefits. But for some, the Covid-19 crisis presented an opportunity to change course; indeed, the post-lockdown job market faces a shortage of workers even as it recovers.These are the stories of six people who transformed their careers during the past two years. For some, it was a financial imperative. For others, lockdowns became a chance to rethink their path. For each, it was a big risk on a new future..“My favorite part of the job is when I get a compliment from a customer.”Tre’Vonte CurrieTre’Vonte Currie frying fresh wontons during his dinner shift at Fahrenheit, where he’s learning the skills he’ll need to someday open his own food business.Amber Ford for The New York TimesFood has long been Mr. Currie’s passion.Amber Ford for The New York TimesMr. Currie prepping kale for salads.Amber Ford for The New York TimesWhen he was growing up, nothing brought Tre’Vonte Currie as much joy as food: his mom’s macaroni and cheese, the brownies and ice cream that fed his sweet tooth. Like a “mad scientist,” he created recipes for fried baloney, spaghetti and chicken Alfredo in his family’s kitchen.As a teenager, Mr. Currie dreamed of opening his own restaurant. It would be spacious and filled with warmth. Maybe there would be chandeliers. The food would include a range of cultural cuisines, from pizza to curry.At the start of the pandemic, Mr. Currie, 22, felt stuck. He had dropped out of high school in 2019 because he had had trouble focusing, even though he hadn’t found the curriculum difficult. He made money by doing odd jobs, like roofing and landscaping, around his Cleveland neighborhood, mostly from friends who wanted to help him out. But much of that work disappeared when Covid-19 swept the city.Then in August 2021, Mr. Currie’s mother learned about a free program near their home called Towards Employment, which offered career coaching and job search services. Mr. Currie was skeptical at first, but after speaking with the program’s coordinators, he signed up for two weeks of training in professional behaviors like how to dress for job interviews. Immediately afterward, he got a job at a restaurant in downtown Cleveland.In January, Mr. Currie took a new job at a high-end contemporary American restaurant, Fahrenheit, where he works 40 hours a week cooking and cleaning. He feels energized, knowing he is building the skills he needs to someday open his own business, maybe starting with a food truck.“My favorite part of the job is when I get a compliment from a customer about how good the meal was,” he said. “That lights up my day.”“I had generations before me teaching me to be a better mom.”Dwanét PerryDwanét Perry with her son. Nearly two years after being laid off, she has launched her own candlemaking business.Courtney Yates for The New York TimesMs. Perry has saved enough to move into her own apartment.Courtney Yates for The New York TimesMs. Perry sells her candles online.Courtney Yates for The New York TimesMs. Perry delivering for DoorDash, one of several jobs she juggles to support her family.Courtney Yates for The New York TimesDwanét Perry, 25, was six months pregnant when she was laid off from her job at a money transfer company in Queens in March 2020. The notice brought a jolt of pain and tough questions: How would she support herself and her baby? What could she do to move her life forward?Her son was born in June, and she moved the two of them into her mother’s home in Oradell, N.J. It was a painful period, but the bright spot was her family. She spent the summer surrounded by her mom, her grandmother and her younger sisters.“Everything there was cozy and comforting,” Ms. Perry said. “I had generations before me teaching me to be a better mom and telling me things I didn’t know.”Ms. Perry started thinking about how she might use the moment of upheaval to move toward her dream of doing something creative.She started watching YouTube and Instagram videos on candle making. Figuring that “everyone loves candles,” she decided to try making and selling her own. She melted soy wax in a double boiler and added oils to create different scents: pink sugar, cucumber melon, fallen leaves, sweater weather. She called her business Flame N Mama, in honor of her newborn son.Now Ms. Perry balances several jobs. She delivers for DoorDash three to four hours a day and was recently hired as a registration specialist at a car dealership. In the evenings, she makes and sells her candles to people who find her on social media.She was able to save up and move back to Queens with her son: “He has a very great sense of humor,” Ms. Perry said, laughing. “He loves to stick with his mommy.”“You have no choice but to be really good at it.”Liz MartinezLiz Martinez finds commonalities between her new career as a dental assistant and her old job as a beauty adviser.Christie Hemm Klok for The New York TimesMs. Martinez dropping her two daughters off at day care in San Francisco.Christie Hemm Klok for The New York TimesWhen Liz Martinez, 32, started training to be a dental assistant last year, she assumed it would be drastically different from her previous work as a beauty adviser at Sephora in San Francisco. But she found surprising commonalities: She practices the technical skills until they feel seamless, and she connects with clients and tries to ease their day.As a dental assistant, “you have no choice but to be really good at it,” she said. “It’s nice not being nervous.”Ms. Martinez hadn’t been closely following the news when Covid-19 started to spread in March 2020, so she was confused about why Sephora told her to put away makeup samples. Then she got an email that the store was temporarily closing. Soon after, she gave birth to her second daughter and wasn’t able to work because she had to look after her children during the day. She had no income to support her family.“I realized at that moment you can be surrounded by people and still be super alone,” she said.She learned that she could train to be a dental assistant through a local chapter of the Jewish Vocational Service, a nonprofit. She signed up for the three-month course: one month of Zoom classes, two months of hands-on training. By the fall of 2021, a clinic had hired her.The dentist she works with, Dr. Earl Capuli, continues to applaud Ms. Martinez’s improvement on the job, especially in mixing dental compounds. “The day I finally got it perfectly, he was bragging about it all day,” she said. “It’s really nice to hear positive feedback.”“That accident was the best thing that ever could have happened to me.”David LevyDavid Levy inside his second food truck, Tacos Cinco De Mayo.Lexey Swall for The New York TimesMr. Levy and his wife, Gloria, working in Arlington, Va.Lexey Swall for The New York TimesMr. Levy opened his first food truck with the insurance payout from a serious car accident.Lexey Swall for The New York TimesWhen the pandemic hit, David Levy, 61, was still reeling from a different life-altering disaster. In 2017, Hurricane Irma seriously damaged his family’s home in Florida, and Mr. Levy lost his job in construction shortly after, forcing him to pack up his belongings with his wife and three children and move in with his mother in Virginia.Mr. Levy struggled to find work in Virginia, so he started driving for Uber to make ends meet. When the pandemic struck, Uber trips fell off, and his income slowed to a trickle.Then he got a letter from the Senior Community Service Employment Program, which provides job training to older workers. In August 2020, he enrolled in a food entrepreneur workshop and had the idea to refashion a large storage trailer into a food truck. But he did not have enough capital to start his own business.And then something terrible and miraculous happened: A car accident left him with injuries serious enough to land him in a hospital. He won $65,000 in an insurance payout in August 2021 and used it to start a food truck business, Pizza Pita, which offers dishes that combine the flavors of Mediterranean and Colombian food.“It is crazy to think about it now, but that accident was the best thing that ever could have happened to me,” he said. “It made it possible for my dream of opening my own business to come true.”Mr. Levy, who was born in Colombia and has a Lebanese father, wanted to channel his heritage through cross-cultural flavor combinations. He recently converted to Judaism and was inspired by the Middle Eastern food he tasted during trips to Israel.Six months ago, he was financially stable enough to move his family out of his mother’s home and into one of their own in McLean, Va. Mr. Levy said his first food truck had been so successful that he opened another, Tacos Cinco De Mayo, last month.“Most days I work from 4:30 a.m. to midnight,” he said. “But no matter how hard it is, when you do something you love, it is worth it.”“I really needed to get out of that job.”Jane Watiri TaylorJane Watiri Taylor loading up her car with vegetables to sell to a grocery delivery service.Miranda Barnes for The New York TimesMs. Watiri Taylor’s tools for harvesting vegetables.Miranda Barnes for The New York TimesMs. Watiri Taylor bundling greens.Miranda Barnes for The New York TimesJane Watiri Taylor was working as a nurse at the Travis County Jail in Austin, Texas, when the pandemic hit. She called it the most frightening time she could remember in 10 years of nursing. Not only was she worried about catching the virus during her shifts, but some inmates took out their anger and frustration on her.“One time this person literally tried to spit on me,” she remembered. “They said, ‘I have Covid, and I’m going to give it to you.’ They spit on my scrubs; luckily it never got on my face.”For Ms. Watiri Taylor, 54, like so many other health care workers, “the burnout was real.”“I like taking care of people. But at that point, I was like, ‘I think I’m going to change jobs and start taking care of plants,’” she said. “You know, plants are never going to call me names, or insult or abuse me. I really needed to get out of that job.”In July 2021, she left to pursue a dream she’d had since her childhood in Kenya: to become a farmer.She had been growing fruits and vegetables in her backyard since 2015. To learn how to run her own farming business, she signed up for a class through Farmshare Austin, a nonprofit. She subleased a small piece of land in Lexington, Texas, to grow fruits and vegetables on a larger scale. She now sells her produce at local farmers’ markets.“I want to nurture people; that’s why I got into nursing,” she said. “With farming, you are still nurturing people, but in a different way. It is really satisfying when you grow stuff and are able to know that eventually it is going to help make sure someone has got food on the table and it is going to nourish their bodies. And to me, that’s enough.”Farming is much less predictable than nursing, and the financial instability worries her. Still, she says she is much happier than when she was working as a nurse.“Money is important,” she said. “But I want to be able to wake up every morning excited about what I’m doing. And that’s how I feel about farming.”“It was time for me to take a step back.”Adam SimonAdam Simon preparing sourdough loaves. He has no plans to return to his old career in finance.Tonje Thilesen for The New York TimesMr. Simon baking at the Entrepreneur Space in Queens.Photographs by Tonje Thilesen for The New York TimesLike many people, Adam Simon baked his own sourdough in the early months of the pandemic. He loved his pandemic hobby so much that he decided to turn it into a new career.In 2017, after working in finance for about 20 years, the 47-year-old left his job as a partner and director of research at the investment firm Echo Street Capital Management to spend more time with his family.“Every day of the week I was out the door before my kids woke up, and by the time I got home, they were asleep,” he said. “It was time for me to take a step back.”In June 2020, Mr. Simon, his wife and two daughters started baking sourdough bread and pastries and sharing the goods with their neighbors in Long Island.Though he had originally planned to return to finance, he decided instead to train himself to be a better baker. He read and watched everything he could about baking and worked in two local bakeries to hone his skills.In February 2022 he launched his own baking business, Sourdough Gambit, a homage to his love of chess.He makes his bread at the Entrepreneur Space, a food and business incubator in the Long Island City neighborhood of Queens, where he produces and sells about 300 baked goods each week. He hopes to open his own bakery and doesn’t plan to work in finance again.“It was a lot to walk away from,” he said. “But in hindsight, it was very much the right thing.” More

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    Why the January Jobs Report May Disappoint, and Is Sure to Perplex

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    The January jobs report is arriving at a critical time for the U.S. economy. Inflation is rising. The pandemic is still taking a toll. And the Federal Reserve is trying to decide how best to steer the economy through a swirl of competing threats.Unfortunately, the data, which the Labor Department will release on Friday, is unlikely to provide a clear guide.A slew of measurement issues and data quirks will make it hard to assess exactly how the latest coronavirus wave has affected workers and businesses, or to gauge the underlying health of the labor market.“It’s going to be a mess,” said Skanda Amarnath, executive director of Employ America, a research group.Data for the report was collected in mid-January, near the peak of the wave of cases associated with the Omicron variant. There is no question that the surge in cases was disruptive: A Census Bureau survey estimated that more than 14 million people in late December and early January were not working either because they had Covid-19 or were caring for someone who did, more than at any other point in the pandemic.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: We asked readers to send questions about inflation. Top experts and economists weighed in.What’s to Blame: Did the stimulus cause prices to rise? Or did pandemic lockdowns and shortages lead to inflation? A debate is heating up in Washington.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.But exactly how those disruptions will affect the jobs numbers is less certain. Forecasters surveyed by Bloomberg expect the report to show that employers added 150,000 jobs in January, only modestly fewer than the 199,000 added in December. But there is an unusually wide range of estimates, from a gain of 250,000 jobs to a loss of 400,000.The Biden administration and its allies are bracing for a grim report, warning on Twitter and in conversations with reporters that a weak January jobs number would not necessarily be a sign of a sustained slowdown.Economists generally agree. Coronavirus cases have already begun to fall in most of the country, and there is little evidence so far that the latest wave caused lasting economic damage. Layoffs have not spiked, as they did earlier in the pandemic, and employers continue to post job openings.“You could have the possibility of a payroll number that looks really truly horrendous, but you’re pulling on a rubber band,” said Nick Bunker, director of economic research for the job site Indeed. “Things could bounce back really quickly.”Still, the January data will be unusually confusing because Omicron’s impact will affect different particulars in different ways.Two Measures of EmploymentThe number that usually gets the most attention, the count of jobs gained or lost, is based on a government survey that asks thousands of employers how many employees they have on their payrolls in a given pay period. People who miss work — because they are out sick, are quarantining because of coronavirus exposure or are caring for children because their day care arrangements have been upended — might not be counted, even though they haven’t lost their jobs.Forecasting the impact of such absences on the jobs numbers is tricky. The payroll figure is meant to include anyone who worked even a single hour in a pay period, so people who miss only a few days of work will still be counted. Employees taking paid time off count, too. Still, the sheer scale of the Omicron wave means that absences are almost certain to take a toll.The jobs report also includes data from a separate survey of households. That survey considers people “employed” if they report having a job, even if they are out sick or absent for other reasons. The different definitions mean that the report could send conflicting signals, with one measure showing an increase in jobs and the other a decrease.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    Omicron’s Economic Toll: Missing Workers, More Uncertainty and Higher Inflation (Maybe)

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    The Omicron wave of the coronavirus appears to be cresting in much of the country. But its economic disruptions have made a postpandemic normal ever more elusive.Forecasters have slashed their estimates for economic growth in the first three months of 2022. Some expect January to show the first monthly decline in employment in more than a year. And retail sales and manufacturing production fell in December, suggesting that the impact began well before cases hit their peak.“Those are Omicron’s fingerprints,” said Constance L. Hunter, chief economist for the accounting firm KPMG. “It will slow growth in the beginning of the first quarter.”On Monday, global markets were in a frenzy, with the S&P 500 plunging nearly 4 percent before recovering its losses. Market analysts said the early declines reflected fears that the Federal Reserve might need to respond more aggressively than expected to rapidly rising prices, a prospect that some economists say has been made more likely by Omicron.Recovery prospects in the longer run are uncertain. Some economists say even temporary job losses could force consumers to pull back their spending, especially now that federal programs that helped families early in the pandemic have largely ended. Others worry that Omicron could compound supply-chain backlogs both in the United States and overseas, prolonging the recent bout of high inflation and putting pressure on the Fed to act. But some see Omicron as the equivalent of a severe winter storm, causing disruptions and delays but ultimately doing little permanent economic damage. The recovery has proved resilient so far, they argue, and has enough underlying momentum to carry it through.“There are so many potential ways that this could go,” said Tara Sinclair, an economist at George Washington University. “We didn’t even agree on where we were going without Omicron, and then you throw Omicron on top.”Omicron is aggravating labor shortages.Travelers at Kennedy International Airport last month. Airlines canceled thousands of flights over the holidays because so many crew members were out sick.Karsten Moran for The New York TimesMore than 8.7 million Americans weren’t working in late December and early January because they had Covid-19 or were caring for someone who did, according to the latest estimate from the Census Bureau’s experimental Household Pulse Survey. Another 5.3 million were taking care of children who were home from school or day care. The cumulative impact is larger than at any other point in the pandemic.Covid-related absences are creating headaches for businesses that were struggling to hire workers even before Omicron. Restaurants and retail stores have cut back hours. Broadway shows called off performances. Airlines canceled thousands of flights over the holidays because so many crew members called in sick; on one day last month, nearly a third of United Airlines workers at Newark Liberty International Airport, a major hub, called in sick.The Status of U.S. JobsMore Workers Quit Than Ever: A record number of Americans — more than 4.5 million people — ​​voluntarily left their jobs in November.Jobs Report: The American economy added 210,000 jobs in November, a slowdown from the prior month.Analysis: The number of new jobs added in November was below expectations, but the report shows that the economy is on the right track.Jobless Claims Plunge: Initial unemployment claims for the week ending Nov. 20 fell to 199,000, their lowest point since 1969.At Designer Paws Salon, a pet grooming company with two locations in the Columbus, Ohio, area, business has been strong in recent months, thanks in part to a pandemic boom in pet ownership. But Misty Gieczys, the company’s founder and chief executive, has been struggling to fill 11 positions despite generous benefits and pay that can reach $95,000 a year in commissions and tips.Omicron has only made things worse, she said. Since Christmas, she has received only three job applications, and just one applicant got back to her after she reached out. Then Ms. Gieczys, who has two young daughters, got Covid-19 herself for the second time, forcing her to stay home. That, on top of day care shutdowns because of the virus, has meant she has spent a significant amount of time away from work.“If I wasn’t the owner, I think I would be fired, honestly,” she said.But while the Omicron wave has contributed to businesses’ staffing woes, there is little sign so far that it has set back the job market recovery more generally. New filings for unemployment insurance have risen only modestly in recent weeks, suggesting that employers are holding on to their workers. Job postings on the career site Indeed have edged down only slightly from record highs.“It’s a vast difference from 2020, where there were mass layoffs,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “Now employers are holding on to people because they expect to be in business in a month.”The new variant could make inflation worse (or maybe better).When the pandemic began in early 2020, it was a shock to both supply and demand, as companies and their customers pulled back in the face of the virus.With each successive wave, however, the impact on demand has gotten smaller. Businesses and consumers learned to adapt. Federal aid helped prop up people’s income. And more recently, the availability of vaccines and improved treatment options have made many people comfortable resuming more normal activities.Supply problems have been slower to dissipate, and in some cases have gotten worse as production and shipping backlogs have grown. If Omicron follows the same pattern, limiting the supply of goods and workers while doing little to dent consumers’ willingness to spend, it could lead to faster inflation.“What should happen is the supply shock should be much larger than the demand shock,” said Aditya Bhave, senior economist at Bank of America. “All of that just means more inflation.”But Omicron’s impact on inflation is not straightforward. Retail sales fell 1.9 percent in December, and restaurant reservations on OpenTable have fallen in January. That suggests that the record-breaking number of coronavirus cases is having an effect on demand, even if it is more muted than in past waves.The latest Covid surge is also the first to hit after the expiration of enhanced unemployment benefits, the expanded child tax credit and most other emergency federal aid programs. Nearly a quarter of private-sector workers get no paid sick time, meaning that even a temporary absence from work could force them to cut back spending now that government benefits aren’t replacing lost income.“That stimulus pay really helped push people past their reticence and say, ‘It’s OK to spend,’” said Nela Richardson, chief economist for ADP, the payroll company. “Now there’s no big push in stimulus, and so people might change their spending behavior.”One possibility is that Omicron could reduce inflation in the short term, as consumers pull back spending, but increase it in the longer run, as the virus leads to shutdowns in Asia that could prolong supply-chain disruptions.Increased uncertainty could cause longer-run damage.Testing facilities were inundated as the Omicron variant took off last month. Covid-related absences are creating headaches for businesses.Kim Raff for The New York TimesCozy Earth, a bamboo bedding and clothing company based in Salt Lake City, was poised to start 2022 on a strong note. Then Omicron “just hit the brakes on us,” said Tyler Howells, the company’s founder and president.Over a three-week period, roughly two-thirds of the company’s 50 employees contracted the virus. A group of web developers flew in for a meeting, but one tested positive, so the meeting had to be canceled. A contractor that was producing signs for an upcoming trade show put the order on hold for a few weeks because too many employees were sick. With so many people out sick in early January, Mr. Howells shut down the office for more than a week.Still, the direct damage to Cozy Earth’s business has been manageable, Mr. Howells said. He is more concerned about the subtler toll that each new false dawn takes on his business, and his ability to plan for the future.“If it continues, it will be a problem,” he said. “It will create damage to the business in terms of fits and starts.”Ms. Sinclair, the George Washington University economist, said the most lasting consequence of the Omicron wave might be the way it had again upended the plans of both businesses and workers. Every time that happens, she said, it increases the risk of permanent damage: Project delays turn into cancellations; expansion plans are abandoned; people who had been thinking about returning to work decide to retire instead.“This piling on of compounding uncertainty is causing further damage,” she said. “This uncertainty is particularly damaging because families aren’t able to make plans, businesses aren’t able to make plans, policymakers aren’t able to make plans.” More

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    As Unemployment Falls, Interest Rate Increases Creep Nearer

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    New data showing that the unemployment rate is falling and wages are rising is expected to cement — and maybe even hasten — the Federal Reserve’s plan to begin raising interest rates this year as it tries to put a lid on high inflation.The jobless rate fell to 3.9 percent in December, based on data collected during a period that largely predated the worst of the Omicron-driven virus surge.Unemployment peaked at 14.8 percent in April 2020, and had hovered around 3.5 percent for months before the onset of the pandemic. The fact that it is returning so rapidly to near-normal levels has caused many central bankers to determine that the United States is nearing what they estimate to be “full employment,” even though millions of former employees have yet to return to the job market.“This affirms the Fed’s conclusion,” Diane Swonk, chief economist at Grant Thornton, said after the report. “This is a hot labor market.”Signs abound that jobs are plentiful but that workers are hard to find: Job openings are at elevated levels, and the share of people quitting their jobs just touched a record. Employers complain they are struggling to hire, and a shortfall of workers has caused many businesses to curtail hours or services.As a result, employers have begun to pay more to retain their employees and lure in new applicants. Average hourly earnings climbed 4.7 percent in the year through December, faster than economists in a Bloomberg survey had expected and much more quickly than the typical pace of progress before the pandemic, which oscillated around 3 percent.Those quick pay gains are a signal to Fed officials that people who want jobs and are available to work are generally able to find it — that the job market is what economists call “tight” and would-be workers are relatively scarce — and that wages might begin to feed into prices. When companies pay more, they may also charge their customers more to cover their costs.The Status of U.S. JobsMore Workers Quit Than Ever: A record number of Americans — more than 4.5 million people — ​​voluntarily left their jobs in November.Jobs Report: The American economy added 210,000 jobs in November, a slowdown from the prior month.Analysis: The number of new jobs added in November was below expectations, but the report shows that the economy is on the right track.Jobless Claims Plunge: Initial unemployment claims for the week ending Nov. 20 fell to 199,000, their lowest point since 1969.Some Fed officials are worried that rising wages and limited production could help sustain elevated inflation — now at nearly a 40-year high. The combination of a healing job market and the threat that price increases will jump out of control has prompted central bankers to speed up their plans to withdraw policy help from the economy.Fed officials are already slowing the big bond purchases they had been using to support the economy. In addition to that, they could raise rates three times in 2022, based on their estimates, and economists think those increases could begin as soon as March. That would make borrowing for cars, houses and business expansions more expensive, slowing spending, hiring and growth.“It makes sense to get going sooner rather than later,” James Bullard, president of the Federal Reserve Bank of St. Louis, said during a call with reporters on Thursday, suggesting that the moves could come very soon. “I think March would be a definite possibility.”And officials have signaled that once rate increases start, they could promptly begin to shrink their balance sheet — where they hold the bonds they have purchased to stoke growth throughout the pandemic downturn. Doing that would help to lift longer-term interest rates, reinforcing rate increases and helping to further slow lending and spending.Economists speculated after the jobs report that the new figures made an imminent rate increase even more likely, and that the central bank might even be prodded to remove its economic support more quickly as wages take off.“We think that today’s report adds to the case for the Fed to kick off its hiking cycle in March,” researchers at Bank of America wrote. “The economy appears to be operating below maximum employment and inflation remains sticky-high.”Krishna Guha, an economist at Evercore ISI, argued that the combination of rapidly declining unemployment and heady wages might even prompt central bankers to increase interest rates faster than once every three months — the fastest pace in their last set of interest rate increases, which took place from 2015 to 2018.“The Fed might end up having to hike at a pace faster than the baseline one hike per quarter,” Mr. Guha wrote.Fresh data out next week could further intensify that pressure: The Consumer Price Index is expected to surge to 7 percent in the year through December, based on a Bloomberg survey of economists, which would be the fastest pace of increase since June 1982.The White House is doing what it can to promote competition, disentangle supply chains and lower prices at the margin, but controlling inflation falls mainly to the Fed, a fact President Biden underlined at a news conference on Friday.“I’m confident the Federal Reserve will act to achieve their dual goals of full employment and stable prices, and make sure the price increases do not become entrenched over the long term,” Mr. Biden said.Investors will get a chance to hear from key Fed officials themselves next week. Jerome H. Powell, whom Mr. Biden has renominated as Fed chair, has a confirmation hearing on Tuesday before the Senate Banking Committee. Lael Brainard, now a Fed governor and Mr. Biden’s pick to be vice chair, has a hearing on Thursday.Both are likely to emphasize the unevenness of the recovery and acknowledge that millions of workers remain out of the job market thanks to caregiving responsibilities, virus fears and other pandemic barriers, as they have throughout the downturn.They will probably also note that overall hiring slowed in December: Employers added 199,000 jobs, the weakest performance all year, as they struggled to find workers. And Omicron poses a risk of further retrenchment, because the November data came before the recent surge in virus cases that has kept restaurant diners at bay and shut down live performances.But at the end of the day, it is the falling jobless rate that is likely to remain in focus for the Fed as it contemplates its next steps, economists think.“A March rate hike seems pretty likely at this stage,” said Julia Coronado, founder of the research firm MacroPolicy Perspectives. Asked if there was one overarching takeaway from the new data, she said: “It’s just a tightening labor market. That’s it.” More