U.S. Employment Declined By 140,000 In December, Unemployment Rate Was Unchanged

Total nonfarm payroll employment declined by 140,000 in December, and the unemployment rate was unchanged at 6.7 percent, the U.S. Bureau of Labor Statistics reported today.

The decline in payroll employment reflects the recent increase in coronavirus (COVID-19) cases and efforts to contain the pandemic.

In December, job losses in leisure and hospitality and in private education were partially offset by gains in professional and business services, retail trade, and construction.

The establishment survey measures nonfarm employment, hours, and earnings by industry.

In December, average hourly earnings for all employees on private nonfarm payrolls increased by 23 cents to $29.81.

Average hourly earnings of private-sector production and nonsupervisory employees increased by 20 cents to $25.09.

These increases largely reflect the disproportionate number of lower-paid workers in leisure and hospitality who went off payrolls, which put upward pressure on the average hourly earnings estimates.

Household Survey Data

In December, both the unemployment rate, at 6.7 percent, and the number of unemployed persons, at 10.7 million, were unchanged.

Although both measures are much lower than their April highs, they are nearly twice their pre-pandemic levels in February (3.5 percent and 5.7 million, respectively).

Among the major worker groups, the unemployment rates for teenagers (16.0 percent) and Hispanics (9.3 percent) increased in December.

The jobless rates for adult men (6.4 percent), adult women (6.3 percent), Whites (6.0 percent), Blacks (9.9 percent), and Asians (5.9 percent) showed little change.

Among the unemployed, the number of persons on temporary layoff increased by 277,000 in December to 3.0 million.

This measure is down considerably from the high of 18.0 million in April but is 2.3 million higher than in February.

The number of permanent job losers declined by 348,000 to 3.4 million in December but is up by 2.1 million since February.

The number of unemployed reentrants increased by 282,000 to 2.3 million over the month, 452,000 higher than in February.

In December, the number of persons jobless less than 5 weeks increased by 449,000 to 2.9 million, while the number of persons jobless 15 to 26 weeks declined by 303,000 to 1.6 million.

The number of long-term unemployed (those jobless for 27 weeks or more), at 4.0 million, was essentially unchanged in December but has increased by 2.8 million since February.

The number of those jobless for 27 weeks or more accounted for 37.1 percent of total unemployed in December.

The labor force participation rate and the employment-population ratio were both unchanged over the month, at 61.5 percent and 57.4 percent, respectively.

These measures are up from their recent April lows but are lower than in February by 1.8 percentage points and 3.7 percentage points, respectively.

The number of persons employed part-time for economic reasons, at 6.2 million, decreased by 471,000 over the month.

This measure is down from its April high of 10.9 million but is 1.8 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.

In December, the number of persons not in the labor force who currently want a job, at 7.3 million, was little changed over the month but is 2.3 million higher than in February.

These individuals were not counted as unemployed because they were not actively looking for work during the last 4 weeks or were unavailable to take a job.

Among those not in the labor force who currently want a job, the number of persons marginally attached to the labor force, at 2.2 million, changed little in December but is up by 749,000 since February.

These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey.

The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was essentially unchanged at 663,000 in December but is up by 262,000 since February.

Household Survey Supplemental Data

In December, 23.7 percent of employed persons teleworked because of the coronavirus pandemic, up from 21.8 percent in November.

These data refer to employed persons who teleworked or worked at home for pay at some point in the last 4 weeks specifically because of the pandemic.

In December, 15.8 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic–that is, they did not work at all or worked fewer hours at some point in the last 4 weeks due to the pandemic.

This measure is 1.0 million higher than in November.

Among those who reported in December that they were unable to work because of pandemic-related closures or lost business, 12.8 percent received at least some pay from their employer for the hours not worked, little changed from November.

Among those not in the labor force in December, 4.6 million persons were prevented from looking for work due to the pandemic.

This measure is up from 3.9 million in November. (To be counted as unemployed, by definition, individuals must be either actively looking for work or on temporary layoff.)

These supplemental data come from questions added to the household survey beginning in May to help gauge the effects of the pandemic on the labor market.

The data are not seasonally adjusted. Tables with estimates from the supplemental questions for all months are available online at www.bls.gov/cps/effects-of-the-coronavirus-covid-19-pandemic.htm.

Establishment Survey Data

Total nonfarm payroll employment declined by 140,000 in December.

Employment declines in leisure and hospitality, private education, and government were partially offset by gains in professional and business services, retail trade, construction, and transportation and warehousing.

In December, nonfarm employment was below its February level by 9.8 million, or 6.5 percent.

In December, employment in leisure and hospitality declined by 498,000, with three-quarters of the decrease in food services and drinking places (-372,000).

Employment also fell in the amusements, gambling, and recreation industry (-92,000) and in the accommodation industry (-24,000).

Since February, employment in leisure and hospitality is down by 3.9 million, or 23.2 percent.

Employment in private education decreased by 63,000 in December. Employment in the industry is down by 450,000 since February.

Government employment declined by 45,000 in December.

Employment in the component of local government that excludes education declined by 32,000, and state government education lost 20,000 jobs.

Federal government employment increased by 6,000. Since February, government employment overall is down by 1.3 million.

Other services lost 22,000 jobs in December, with over half of the loss in personal and laundry services (-12,000).

Employment in the other services industry is down by 453,000 since February.

In December, employment in professional and business services increased by 161,000, with a large gain in temporary help services (+68,000).

Job growth also occurred in computer systems design and related services (+20,000), other professional and technical services (+11,000), management of companies and enterprises (+11,000), and business support services (+7,000).

Employment in professional and business services is down by 858,000 since February.

Retail trade added 121,000 jobs in December, with nearly half of the growth occurring in the component of general merchandise stores that includes warehouse clubs and supercenters (+59,000).

Job gains also occurred in non-store retailers (+14,000), automobile dealers (+13,000), health and personal care stores (+10,000), and food and beverage stores (+8,000).

Employment in retail trade is 411,000 lower than in February.

Construction added 51,000 jobs in December, but employment in the industry is 226,000 below its February level.

In December, employment rose in residential specialty trade contractors (+14,000) and residential building (+9,000), two industries that have gained back the jobs lost in March and April.

In December, employment also increased in nonresidential specialty trade contractors (+18,000) and in heavy and civil engineering construction (+15,000).

Employment in transportation and warehousing rose by 47,000 in December, largely in couriers and messengers (+37,000).

While employment in transportation and warehousing overall is 89,000 lower than in February, employment in couriers and messengers has increased by 222,000 over the same period.

In December, employment also grew in warehousing and storage (+8,000) and in truck transportation (+7,000), while transit and ground passenger transportation lost 9,000 jobs.

In December, health care added 39,000 jobs.

Employment growth in hospitals (+32,000) and ambulatory health care services (+21,000) was partially offset by declines in nursing care facilities (-6,000) and community care facilities for the elderly (-5,000).

Health care employment is 502,000 lower than in February.

In December, manufacturing employment increased by 38,000, with gains in motor vehicles and parts (+7,000), plastics and rubber products (+7,000), and nonmetallic mineral products (+6,000).

By contrast, miscellaneous nondurable goods manufacturing lost 11,000 jobs over the month.

Despite gains over the past 8 months, employment in manufacturing is 543,000 below its February level.

Wholesale trade employment rose by 25,000 in December but is down by 251,000 since February.

In December, job gains occurred in durable goods (+11,000) and nondurable goods (+11,000).

In December, employment changed little in other major industries, including mining, information, and financial activities.

The average workweek for all employees on private nonfarm payrolls declined by 0.1 hour to 34.7 hours in December.

In manufacturing, the workweek was unchanged at 40.2 hours, and overtime increased by 0.1 hour to 3.3 hours.

The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 34.2 hours. (See tables B-2 and B-7.)

The change in total nonfarm payroll employment for October was revised up by 44,000, from +610,000 to +654,000, and the change for November was revised up by 91,000, from +245,000 to +336,000.

With these revisions, employment in October and November combined was 135,000 more than previously reported.

Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.

Coronavirus (COVID-19) Impact on December 2020

Establishment and Household Survey Data

Data collection for both surveys was affected by the coronavirus (COVID-19) pandemic.

In the establishment survey, approximately one-fifth of the establishments are assigned to four regional data collection centers for collection. Although these centers were closed, interviewers at these centers worked remotely to collect data by telephone.

Additionally, BLS encouraged businesses to report electronically. The collection rate for the establishment survey was 76 percent in December, about the same as the average for the 12 months ending in February 2020.

The household survey is generally conducted through in-person and telephone interviews.

However, for the safety of both interviewers and respondents, in-person interviews were conducted only when telephone interviews could not be done.

The household survey response rate was 77 percent in December, considerably higher than the low of 65 percent in June but below the average of 83 percent for the 12 months ending in February 2020.

In the establishment survey, workers who are paid by their employer for all or any part of the pay period including the 12th of the month are counted as employed, even if they were not actually at their jobs.

Workers who are temporarily or permanently absent from their jobs and are not being paid are not counted as employed, even if they continue to receive benefits.

In the household survey, individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the survey reference week (December 6th through December 12th).

Workers who indicate they were not working during the entire survey reference week and expect to be recalled to their jobs should be classified as unemployed on temporary layoff.

As in recent months, a large number of persons were classified as unemployed on temporary layoff in December.

Since March, household survey interviewers have been instructed to classify employed persons absent from work due to temporary, coronavirus-related business closures or cutbacks as unemployed on temporary layoff.

As in earlier months, some workers affected by the pandemic who should have been classified as unemployed on temporary layoff were instead misclassified as employed but not at work.

However, the share of responses that may have been misclassified was highest in the early months of the pandemic and has been considerably lower in recent months.

For March through November, BLS published an estimate of what the unemployment rate would have been had misclassified workers been included among the unemployed.

Repeating this same approach, the overall December unemployment rate would have been 0.6 percentage point higher than reported.

However, this represents the upper bound of our estimate of misclassification and probably overstates the size of the misclassification error.                                                                 

According to usual practice, the data from the household survey are accepted as recorded.

To maintain data integrity, no ad hoc actions are taken to reclassify survey responses. More information is available at www.bls.gov/covid19/employment-situation-covid19-faq-december-2020.htm.        

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