The economy added 531,000 jobs in October, blowing past economists' predictions of 450,000, and the unemployment rate fell to 4.6 percent from 4.8 percent.
Friday’s release from the Bureau of Labor Statistics followed a disappointing September report in which a mere 194,000 jobs were added, compared to the half million expected by economists.
“America is getting back to work. Our economy is starting to work for more Americans,” President Biden said in remarks at the White House on Friday. "Before we passed the Rescue Plan, forecasters said it would take until the end of 2023 to get to 4.6 unemployment rate. Today, we’ve reached that rate two years before forecasters thought it was possible."
Labor market experts had been projecting a rebound for October's numbers, based on falling Covid-19 cases in much of the country and increases in so-called “high frequency” metrics like airport passenger traffic and restaurant reservations. A robust private-sector jobs report from payroll processor ADP showed October job growth of 571,000 — a better-than-anticipated figure, driven by the addition of 185,000 leisure and hospitality jobs.
“The slowdown we’ve seen the last few months has been largely driven by the delta variant. As cases of Covid-19 start to fall, we expect that the recovery will be accelerated,” said Daniel Zhao, senior economist at Glassdoor.com.
Economists say the contours of a post-Covid economy are coming into focus, albeit slowly. One aspect of the post-Covid job market that already is clear: The pandemic fundamentally altered the contours of the American workforce, a finding that has implications for lagging labor force participation, particularly among women.
The pandemic fundamentally altered the contours of the workforce, with an outsized implication for women.
“The reality is we’ve become accustomed to having the opportunity and the ease of being able to do a lot of things at home,” said Lisa Erickson, co-head of the public markets group in U.S. Bank Wealth Management. “What the pandemic really did is accelerated and cemented that behavior.”
The pandemic also changed how many Americans relate to their jobs. “People are reassessing their life choices,” Erickson said — a collective evaluation economist say is a factor driving worker shortages in many lower-income sectors.
Dan North, senior economist at Euler Hermes North America, said: “I think the shrinkage is permanent because people are now demanding that they have work-from-home schedules, and if they don’t get them, they go somewhere else. That’s going to reduce the demand for office space,” a behavioral shift that has ripple effects on labor demand across a variety of job types.
People are now demanding that they have work-from-home schedules, and if they don’t get them, they go somewhere else.
What this means in practice is that there might be fewer people needed to do certain jobs — restaurant servers and cooks in downtown office districts, commercial construction workers, store clerks — for the foreseeable future.
Escalating wage growth remains a concern. “What we want to see is that balance between workers being able to maintain their incomes, but hopefully not so high that it contributes to an inflationary spiral,” Erickson said.
Recent productivity gains have so far helped companies offset the impact of paying higher wages on profit margins — one big reason the economy has so far been able to ward off an out-of-control inflationary wage-price spiral. “In my mind, productivity is driving growth right now,” said David Wagner, portfolio manager and analyst at Aptus Capital Advisors. “We’re becoming a more efficient nation.”
Despite improvements in overall workforce health, women’s participation remains depressed. Economists say there are a few likely culprits, such as the uneven distribution of child care responsibilities for working parents, as well as the service-sector-focused nature of the pandemic job losses, which were concentrated in many industries that disproportionately employ women.
“For mothers, I think they need a sense of stability about what the situation with in-person schooling and child care will look like,” said Nick Bunker, economist and head of research at Indeed hiring services company.
Improving vaccine uptake could help facilitate a return of commercial activity in the service sector industries that tend to employ women, he added. “As there’s more economic stability, that could also attract more women into the workforce.”
The pandemic also exacerbated long-standing challenges faced by working parents — mothers in particular — and laid bare the tenuous fragility of caregiving support in the absence of a social safety net.
“Generally speaking, there are a host of policies that can be used to help boost labor force participation for women,” Zhao said. “Access to child care or paid family leave, even outside the context of Covid, can help encourage women to stay in the workforce.”
One factor with a potentially significant impact is the availability of Covid-19 vaccines for younger kids.
“Though the number of people citing Covid-19 as the primary reason for being out of the workforce has dropped with increasing vaccination rates, it remains one of the key considerations,” said Ross Mayfield, an investment strategy analyst at Baird. “As of yet, the reopening of schools has not provided the hoped-for bump in labor participation.”
“I think as Covid vaccines become available for younger children, that should help make parents available for work,” Zhao said. “Especially if it changes quarantine policies at schools, that’s an element of uncertainty that’s no longer hanging over them.”
That said, vaccine hesitancy among parents still could be a significant roadblock to getting parents back into the job market.
“I think it will be six months or so before we see a very notable improvement,” said Sylvia Jablonski, chief investment officer at Defiance ETFs, adding that she does think that parents’ concerns will wane over time. “As we see the results of vaccinated children doing well, I expect the pick-ups in the job market to follow suit.”