The Labor Department reported on Friday that the U.S. gained 467,000 jobs in January despite fears the economy lost jobs amid the omicron-driven surge of COVID-19 cases, The Hill reported. While the unemployment rate ticked up slightly to 4 percent, January job growth far exceeded the expectations of many economists, who feared the U.S. would lose jobs last month for the first time since December 2020. Millions of Americans missed work in January after they or a loved one fell ill with COVID-19. The unprecedented number of Americans out sick and several alarming declines in private sector economic activity bred fears of a miserable January jobs report. Six million Americans said they were unable to work in January because their employer lost business due to the pandemic, according to the Labor Department, almost double December’s total of 3.1 million. But the labor market held strong through the peak of the omicron surge in mid-January with widespread jobs gains across industries. The Labor Department also revised the December employment gain up from an initially reported 199,000 to 510,000 and November’s job gain from 249,000 to 647,000 — painting a much stronger picture of the labor market than expected.
Private payrolls tumbled by 301,000 in January, posting their biggest drop-off since the onset of the pandemic, as the omicron variant set off a spike in coronavirus cases, according to data released yesterday, the Washington Post reported. The unexpected findings by ADP — which had forecast a gain of 200,000 jobs for the month — represent the first time the payrolls processing firm has reported negative employment growth since December 2020 and the biggest decline in employment since spring 2020. They also cut against federal data showing more moderate losses. The wide variance suggests the labor market was more chaotic last month than previously thought. The federal government will offer its own snapshot of the labor market on Friday, when it releases January jobs data. Though ADP’s estimates often differ, the shift it documented yesterday — from a gain of 807,000 jobs one month, to a loss of 301,000 the next ― could reset expectations for the Labor Department’s report.
Some 4.3 million people quit or changed jobs in December — down from last month’s all-time high but still near record levels, as the labor market remained unsettled and the omicron variant swept through the U.S., the Washington Post reported. Employers reported some 10.9 million job openings in a survey from the Bureau of Labor Statistics, well above pre-pandemic averages. December proved to be an incredibly disruptive month for the labor market. Parents scrambled to navigate their work lives as schools and day cares closed due to growing virus cases. Employees grappled with sudden outbreaks at work, with little of the social safety net protections or pandemic-controlling measures that helped cushion the blow from earlier waves. At least 4 million workers resigned each month during the second half of 2021, with many of them departing to find work that had better pay, better benefits or more flexible schedules.
Hanging over the $800 billion Paycheck Protection Program, one of the government’s most expensive pandemic relief efforts, is a simple question: whether or not it worked. New research, drawing on millions of wage and payroll records, suggests a complicated answer: Yes, but at an extraordinarily high cost, according to the New York Times reported. One new analysis found that only about a quarter of the money spent by the program paid wages that would have otherwise been lost, partly because the government steadily loosened the rules for how businesses could use the money as the pandemic dragged on. And because many businesses remained healthy enough to survive without the program, another analysis found, the looser rules meant the Paycheck Protection Program ended up subsidizing business owners more than their workers. “Jobs and businesses are two separate things,” said David Autor, an economics professor at the Massachusetts Institute of Technology who led a 10-member team that studied the program. “We tried to figure out, ‘Where did the money go?’ — and it turns out it didn’t primarily go to workers who would have lost jobs. It went to business owners and their shareholders and their creditors.” Questions about the success of the program have gained urgency as the Omicron variant of the coronavirus disrupts the country’s economic upswing, intensifying calls from hard-hit industries like restaurants for a new round of federal aid. Congress rushed to create the Paycheck Protection Program in the pandemic’s early days, trying to prevent struggling small companies from gutting their work forces and adding to the staggering unemployment rate. The program offered business owners low-interest loans of up to $10 million to cover roughly two months of payroll and a few additional expenses. The loans would be forgiven as long as the money went to permitted costs. Nearly every company in America with 500 or fewer workers (and some larger ones) qualified: law firms, construction companies and restaurant chains as well as Uber drivers, freelancers and the bars, boutiques, grocery stores and hair salons that are the backbone of many Main Streets. Early studies of the program — which generally focused on the largest small companies — were not flattering, finding it had little effect on preserving jobs. But Michael Dalton, a research economist for the Bureau of Labor Statistics who drew on extensive wage records collected by the government that other researchers did not have access to, said it had performed better than he expected. Within one month of being approved, companies that got loans had an average head count 8 percent higher than comparable businesses that didn’t. After seven months, their work forces were still 4 percent larger, maintaining a lead even as hiring nationwide began to bounce back.
Congress is cooking up another relief bill for small business, but it could quickly expand beyond just small business to balloon in size, according to a Wall Street Journal editorial. The $1.9 trillion bill passed last March included $50 billion for small businesses, including $28.6 billion in grants for restaurants, but this money has been depleted. Maryland Sen. Ben Cardin and Mississippi’s Roger Wicker are cobbling together another relief bill for restaurants. “The restaurant money is a fairness issue. Some restaurants got it and others did not,” Mr. Cardin said. Twenty-eight mayors recently sent a letter imploring Congress to replenish the Restaurant Revitalization Fund from the March spending bill. They say 86% of independent restaurants and bars that didn’t receive grants “risk permanently closing,” and 177,000 applicants have been denied relief. The editorial sympathizes with restaurants, which are also having to deal with rising prices and worker shortages. Some have faced a drop-off in business during Covid surges as customers stay home. Yet the commentary asserts that restaurants in certain states seem to be struggling much more in part because of population flight during the pandemic. Data from the website OpenTable shows restaurant reservations were up 19% in Florida, 14% in South Carolina and 9% in Arizona on Jan. 3 compared to the same date in 2019. Reservations were down 78% in Maryland, 52% in New York and 45% in Illinois. Treasury has allowed states and localities to use the $350 billion in budget aid from the March bill to help struggling households, small businesses and industries. States and localities are swimming in revenue, so they can assist their own restaurants, though some like New York have preferred to pay off public unions and grow government programs instead. Congress could also repurpose money that states and localities haven’t spent to replenish the restaurant fund or hospitals, but there’s no need to appropriate new funds, the editorial argues. It has already spent nearly $6 trillion on Covid relief. Read more.(Subscription required.)
*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.
U.S. public pension funds will likely have to switch to more aggressive investment strategies in the coming years to fill funding gaps despite assets held by sovereign investors having grown to record levels amid the 2021 equity market boom, a new report said, Reuters reported. On average, the difference between assets and liabilities at U.S. public pension funds, known as the "funded ratio," remains "unsatisfactory" at less than 75%, sovereign investor specialist Global SWF said in a report. To boost returns, many will likely have to focus on alternative assets, including private equity and private credit, Diego Lopez at Global SWF told Reuters. "Certain pockets of real assets including logistics properties and infrastructure may also benefit from increased interest, and hedge funds will continue to be an important part of US [public pension funds'] portfolios." Assets held by sovereign wealth and public pension funds globally rose to a record $31.9 trillion in 2021, thanks to rising U.S. stock and oil prices, and investments rose to their highest for several years, Global SWF said in a previous report.
As employers seek to hire and keep workers in a challenging job market, more are weighing offering help with student debt repayments as a job benefit, the New York Times reported. That’s good news for student loan borrowers because a freeze on federal student loan payments, part of the government’s pandemic relief effort, is scheduled to end on May 1. Millions of borrowers — many of whom haven’t made loan payments in nearly two years — will once again have to start paying their monthly bill. Student debt repayment programs were a hot topic in 2019, but companies’ interest ebbed in the pandemic, said Craig Copeland, senior research associate with the Employee Benefit Research Institute, as the pause on federal student debt payments temporarily took pressure off borrowers. Employers shifted their focus to programs offering more immediate help, like emergency savings and hardship payments. But there are signs of renewed interest among both borrowers and employers as the pause expires and employers seek to hire and hold on to increasingly emboldened workers. The institute’s 2021 survey of employers’ “financial well-being” benefits found that about 17 percent of large employers — those with 500 or more workers — offered some form of student debt assistance. Of those, nearly a third (30 percent) offered direct loan subsidies and an additional 40 percent said they planned to start offering direct help in the next year or two.
The U.S. supply of computer chips has fallen to alarmingly low levels, raising the prospect of factory shutdowns, the Commerce Department reported yesterday, according to the Associated Press. Companies that use semiconductors are down to less than five days of inventory — a sharp drop from 40 days in 2019, according to a department survey of 150 companies. The chips used in the production of automobiles and medical devices are especially scarce. Demand for chips, the department said, was up 17% last year from 2019. Citing the results, the Biden administration called on Congress to pass stalled legislation that would provide $52 billion for domestic semiconductor production. “The semiconductor supply chain remains fragile, and it is essential that Congress pass chips funding as soon as possible,” Commerce Secretary Gina Raimondo said in a statement. “With sky-rocketing demand and full utilization of existing manufacturing facilities, it’s clear the only solution to solve this crisis in the long-term is to rebuild our domestic manufacturing capabilities.”
