U.S. Unemployment Rate Fell in January Despite Sluggish Job Growth

This content leverages data from USAFacts, a non-profit that visualizes governmental data. You can learn more on its website, Facebook, and Twitter.

What’s the story?

• The Bureau of Labor Statistics (BLS) on Friday released its jobs report for January 2021, which found the U.S. economy added 49,000 jobs and the unemployment declined by 0.4 percentage points to 6.3%. The Dow Jones forecast of economists projected a gain of 50,000 jobs and the unemployment rate to remain at 6.7%.
• The BLS wrote that the “labor market continued to reflect the impact of the coronavirus (COVID-19) pandemic and efforts to contain it.” The modest gains come after the December jobs report showed the economy lost jobs for the first time in seven months, a period in which the economy recovered 12.3 million of the 22.2 million jobs lost in March and April 2020.
• This USAFacts chart shows the monthly unemployment rate dating back to 2007, which shows the modest improvement from December to January:

Jobs Report Sector Breakdown

• Most of January’s job gains were due to increases of 97,000 in professional and business services, in addition to 33,900 in public and private education.
• Those gains were partially offset by losses in leisure and hospitality (-61,000), retail (-38,000), and healthcare (-30,000).
• This USAFacts chart shows the number of total jobs in specified sectors each month dating back to November 2019:

Short-Term & Long-Term Unemployment:

• About 4 million (or 40%) of Americans who were unemployed in January had been without a job for at least 27 weeks, as this USAFacts chart shows:

• Many of the long-term unemployed have exhausted their state unemployment benefits, which typically last between 13 and 26 weeks, although they’re eligible for the Pandemic Emergency Unemployment Compensation (PEUC) program which offers up to 24 additional weeks of assistance. The PEUC was extended through March 14th by the COVID relief package enacted in December 2020.

Demographic Unemployment Information

• Unemployment rates declined for adult men (to 6.0% from 6.4% in December), adult women (6.0% from 6.3% in December), and teenagers (14.8% from 16% in December).
• Unemployment rates declined among whites (5.7% from 6% in December), blacks (to 9.2% from 10.3% in December), Hispanics (to 8.6% from 9.3% in December), and changed little for Asians (6.6% from 5.9% in December).

Revisions & Data Notes

• Employment in December was revised down by 87,000 from -140,000 to -227,000.
• Employment in November was revised down by 72,000 from +336,000 to +264,000.
• As it has since March, the BLS published an estimate of what the unemployment rate would have been had misclassified workers been included. The misclassification hinges on a question about the main reason people were absent from their jobs, with people absent due to temporary, pandemic-related closures recorded as absent due to “other reasons” as opposed to unemployed due to temporary layoff.
• Using this approach, the December unemployment rate would have been 0.6 percentage points higher than reported. The BLS notes that this represents the upper bound of their estimate of misclassification and probably overstates the size of the misclassification error.
• According to usual practice at the BLS, data is accepted as recorded in the household survey. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.

— Eric Revell

(Photo Credit: iStock.com / martin-dm)