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Hiring slowed sharply in November, even before omicron, with 210,000 jobs added

Restaurants, like this McDonald's in Miami Beach, Fla., have been big engines of job growth.
Joe Raedle
Getty Images
Restaurants, like this McDonald's in Miami Beach, Fla., have been big engines of job growth.

Updated December 3, 2021 at 12:02 PM ET

Hiring slowed dramatically last month as COVID-19 cases rose, even before the arrival of a new and and even more worrisome coronavirus variant, which could put another speed bump on the road to labor market recovery.

Employers added just 210,000 jobs in November, according to a monthly snapshot from the Labor Department. Job growth appeared to lose momentum after stronger hiring in September and October. Hiring figures for those months were revised upwards.

However, a separate survey used to calculate the unemployment rate paints a different picture. It shows more than half a million people rejoining the workforce last month, while over a million found jobs. The unemployment rate fell sharply to 4.2%, from 4.6% in October.

"The improvement in the unemployment rate is really quite stunning," said Cecelia Rouse, who leads President Biden's Council of Economic Advisers. "It's important to note that we saw improvements in the unemployment rates for Blacks and Hispanics, for Asians and for men and for women. So that was broadly shared. This suggests it's a labor market where people are coming back and where they're finding jobs."


The mixed signals show just how unpredictable the labor market is in the pandemic economy. And the new variant adds to that uncertainty.

Health experts don't yet know how contagious the omicron strain is or how effective vaccines will be against it. But the delta wave over the summer illustrates how a rise in infections can reduce both demand for workers and the number of people willing to work.

"We saw in a very real way a slowdown in hiring as a result of the delta variant," said Nela Richardson, chief economist for the payroll processing company ADP. "There were fewer people going to restaurants. Fewer people traveling. And that had an impact on hiring. It likely had an impact on fewer people deciding to come back into the labor market."

So far the U.S. has recovered about 82% of the jobs lost during the pandemic. But 2.4 million others who left the workforce when the coronavirus struck have not yet returned. It's not clear when — or even if — they will.

"We all thought there would be a significant increase in labor supply and it hasn't happened. So you ask, 'Why?' " Federal Reserve Chairman Jerome Powell told a Senate committee this week. "There's tremendous uncertainty around that, but a big part of it is clearly linked to the ongoing pandemic."

Powell said he doesn't expect the omicron variant to do anywhere near as much damage to the job market as the first wave of the pandemic, in the spring of 2020. But it could drag out the recovery.

Many employers complain they would like to hire more people but don't have enough applicants. Powell warned that persistent labor shortages could worsen the supply-chain bottlenecks that have already pushed inflation to its highest level in more than three decades.

Many observers now think the central bank may raise interest rates earlier than expected next year, in an effort to keep a lid on rising prices.

Up until now, the Fed has been willing to tolerate somewhat higher inflation in hopes of fostering full employment. But as the jobs recovery drags on, Powell appears to be rethinking that balancing act.

"To get back to the kind of great labor market we had before the pandemic, we're going to need a long expansion," Powell said. "To get that, we're going to need price stability. And in a sense, the risk of persistent high inflation is also a major risk to getting back to such a labor market."

Factories, which have seen strong demand, added 31,000 workers in November.

"Manufacturing is powering through the supply-chain and labor supply issues," Richardson said. "Even though we're seeing a slowdown in supplier deliveries that could impede production, hiring remains solid."

Copyright 2022 NPR. To see more, visit https://www.npr.org.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.