The unemployment situation in November 2021 reflects an ongoing and uneven recovery from the COVID-19 pandemic. The U.S. economy added 210,000 nonfarm payroll jobs, seasonally adjusted, and the unemployment rate fell by 0.4 percentage point to 4.2%, the U.S. Bureau of Labor Statistics reported Dec. 3.
“The numbers were very different than the expectation,” says Joe Pickard, ISRI’s chief economist and director of commodities. “The consensus forecast I saw projected over 500,000 jobs created; the actual number was 210,000. But the unemployment rate was better. The expectation was 4.5% and the actual rate was 4.2%.”
The nonfarm payroll employment for November is below 2021’s monthly average of 555,000 jobs. The November 2021 unemployment rate is at its lowest level since March 2020 at 4.4%. The rate is down from the peak unemployment rate of 14.8% in April 2020 but higher than the pre-recession rate of 3.5% in January 2020.
“Fewer people were employed in November 2021 than in January or February 2020, which was pre-COVID, so we’re still not back to full employment,” says Bret Biggers, ISRI’s senior economist. “Household participation rate did increase in November but it’s still below pre-COVID [numbers], so we’re making improvements but we’re not fully back yet.”
November 2021 saw gains in several sectors including professional and business services, transportation and warehousing, construction, and manufacturing. Though professional and business services are still 69,000 jobs below pre-pandemic levels, those sectors did add 90,000 jobs in November. Transportation and warehousing jobs, sectors that affect the recycling industry, increased by 50,000 and is 210,000 above February 2020. Warehousing and storage jobs grew 9,000 and couriers and messengers grew 27,000. While construction employment is 115,000 below the pre-pandemic level, it rose by 31,000 in November. Manufacturing added 31,000 jobs in November with 10,000 in miscellaneous durable goods and 8,000 in fabricated metal products. There were 7,000 new jobs in food manufacturing and 2,200 in paper and paper products.
Employment in retail trade fell by 20,000 in November 2021, with 20,000 job losses in general merchandise stores, a loss of 18,000 in clothing and clothing accessories stores, and 9,000 positions lost in sporting goods, hobby, book, and music stores. Retail trade employment is 176,000 lower than in February 2020.
Omicron Variant Concerns
Though not reflected in the November employment numbers, since the data was collected a month prior, one encroaching concern for employment is the rise of the new Omicron COVID-19 variant. “It plays into the employment numbers whether people look for a job in some of the industries is contingent upon the impact of the variant,” Biggers says. “It could be impacting workers’ mentality about whether to try to find a job in the service sector, which remains one of the top sectors effected by COVID-19,”
Concerns about the variant may not only impact workers seeking jobs in the service sector but also consumers’ choices as well. “If people are worried, they may not decide to work in service sectors and diners may choose not to go to restaurants and do fewer entertainment items and that will affect the economy and unemployment,” Biggers says. “However, that could lead to an increase in e-commerce, which would be a good thing for recycled paper as a commodity.”
As the world adjusts to COVID staying a part of life, Biggers says the question is how people respond to the virus and the effect it has on employment. “I don’t know if we’re at a new normal, but I think people have adjusted their mindset that COVID is around, just as people have adjusted to wearing masks.,” he says.
Federal Reserve Board Tapering Program
In November 2021, the Federal Reserve announced it would start scaling back its monthly net asset purchases beginning in November and going into December. The plan was to reduce its $120 billion in monthly bond purchases by $15 billion per month, which would put the timeline for the purchases to end entirely by June 2022.
However, in testimony before a Senate panel on Nov. 30, Fed Chairman Jerome Powell announced plans to discuss potentially speeding the taper at the Fed’s policy meeting on Dec. 14-15. “High inflation and low unemployment are two of the main indicators for the Fed in this case,” Pickard says. Tapering the bond program earlier will also affect how soon the Fed raises the near-zero interest rates. “The Fed will likely raise interest rates earlier than initially expected,” Pickard says. “Rate increases could come as early as the summer because [the Fed] want to end the tapering program before raising the rates.”
After the December meeting, Powell noted rates are unchanged, but the tapering program will be sped up to $30 billion a month instead of $15 billion, with plan to end the quantitative easing by March 2022. “Powell also said the Fed will continue monitoring the economy for maximum employment and stability,” Biggers says. “There is a consensus in the Federal Open Markets Committee that there will be three rate raises next year.”
As the unemployed number decreases, the number of people going back into the office has increased. Supplemental data the Bureau of Labor Statistics released for November shows 11.3% (or a little over 17.5 million) of workers cited that they worked from home in the last four weeks because of COVID-19 related reasons. Not only is this number lower than the peak of COVID in May 2020 when 35.4% (or 48.7 million) workers reported working from home, but it’s also lower than October 2021, where 11.6% (or over 18 million) of workers were remote due to COVID-related concerns.
“More people are going back to work, even office workers, high-income workers, and managerial workers,” Biggers says. “There’s still a lot of people who haven’t gone back in yet, about 1 out of 9 are still working from home due to COVID, but it’s lower than in the first few months of the pandemic when about 1 in 34 people were working from home.”
Biggers and Pickard are interested to see how remote working continues to change in 2022 and beyond. While COVID-19 may no longer be a factor that keeps people from going into the office, there may still a sizable number of remote workers for other reasons. “If I had to guess it’s likely that there will still be more people working from home next year than there were before COVID, but at some point COVID will no longer be the driver,” Pickard says. “At some point you’re working from home because it’s efficient or some other reason, rather than due to COVID.”
Biggers agrees that now much of remote work can be attributed to COVID concerns but that may change in a year or two. “If you’re working from home two or three days a week now it’s possible your office isn’t fully open and people are still practicing social distancing, those are COVID-related reasonings,” he says. “But we’re in a transition. A year from now we could be doing the exact same thing but the reasoning behind remote work wouldn’t be related to COVID. A year from now, you may have reduced your office space, or operating under a new working format, COVID or not.”