In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Friday, February 05, 2021

Comments on January Employment Report

by Calculated Risk on 2/05/2021 09:26:00 AM

The headline jobs number in the January employment report was below expectations, and employment for the previous two months was revised down significantly.  In addition, the annual benchmark revision showed 250 thousand fewer jobs in March 2020 than previously reported.

Leisure and hospitality lost 61 thousand jobs in January due to the pandemic.  In March and April of 2020, leisure and hospitality lost 8.2 million jobs, and then gained about 60% of those jobs back.  However, leisure and hospitality lost jobs in December and January, and is now down 3.9 million jobs since February 2020.

Earlier: January Employment Report: 49 Thousand Jobs, 6.3% Unemployment Rate

In January, the year-over-year employment change was minus 9.603 million jobs.

Permanent Job Losers

Year-over-year change employmentClick on graph for larger image.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the December report. (ht Joe Weisenthal at Bloomberg)

This data is only available back to 1994, so there is only data for three recessions.

In January, the number of permanent job losers increased to 3.503 million from 3.370 million in December.   

Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The prime working age will be key in the eventual recovery.

The 25 to 54 participation rate increased in January to 81.1% from 81.0% in December, and the 25 to 54 employment population ratio increased to 76.4% from 76.3% in December.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of persons employed part time for economic reasons, at 6.0 million, changed little in January. This measure is 1.6 million higher than the February level. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."
The number of persons working part time for economic reasons decreased in January to 5.954 million from 6.170 million in December.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 11.1% in December. This is down from the record high in April 22.9% for this measure since 1994.

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 4.023 million workers who have been unemployed for more than 26 weeks and still want a job.

This does not include all the people that left the labor force. This will be a key measure to follow during the recovery.


The headline monthly jobs number was below expectations, and the previous two months were revised down 159,000 combined.  The headline unemployment rate was declined to 6.3%.

This report was worse than it appears.   The not-seasonally-adjusted decline in employment was at the usual levels for January - even though employment was already depressed (we'd expect fewer seasonal layoffs than normal).  Also, the weather appeared mild in January (the SF Fed will provide weather adjusted employment soon).

Overall, this was another disappointing report.