December Jobs Report Shows Recovery Thrown in Reverse


January 8, 2021

The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor Senior Economist Daniel Zhao:

Today’s jobs report offers an alarming economic bookend to 2020. As the pandemic worsens, the American economy lost 140,000 jobs, the first drop since April in a reminder that the economic recovery is fragile. Unemployment stagnated at 6.7 percent as closures and declining demand forced businesses to once again furlough and lay off workers. Rather than simply tapping the brakes, the economy is actually being thrown in reverse.

Payroll Gains Reverse as Pandemic Worsens

Payroll employment fell 140,000 in December, down from an increase of 336,000 in November. Payrolls are still 9.8 million short of pre-crisis levels, leaving us in a deep economic hole, and today’s report shows that we’re digging ourselves deeper into the hole.

The payroll decline was most prominent in leisure & hospitality which lost a whopping 498,000 jobs in December, indicating that service-providing industries are again bearing the brunt of the worsening pandemic.

New Furloughs Drive Up Temporary Layoffs, Unemployment

The number of workers on temporary layoff rose to 3.0 million in December from 2.8 million in November. The increase is the first from April as businesses are once again forced to furlough workers. Permanent layoffs fell to 3.4 million in December from 3.7 million. After spiking early in the crisis, permanent layoffs have not increased further in the last few months, offering a case for cautious optimism that the current spike in unemployment could be reversed once the vaccine is widely adopted.

Dark Winter Begins Despite Relief Bill, Start of Vaccinations

Today’s report is a harsh reminder that the pandemic controls our economic trajectory, and we’re not out of the woods yet. The start of vaccine distribution offers a light at the end of the tunnel, but only 5.5 million doses have been administered in the United States and a new, more transmissible variant appears to be rearing its head. 

The end-of-year relief bill offers a temporary reprieve to Americans, but many of its provisions expire in several months. Democrats’ new but slim Senate majority may offer an opportunity to pass more relief once President-elect Biden’s administration begins. With the finish line in sight, it is all the more imperative that we get over the finish line by controlling the pandemic and mitigating its economic effects.

More Insights

Payrolls fell 140,000, leaving us 9.8 million jobs short of pre-crisis levels. In some ways, the economic data is catching up to reality. It’s been obvious for some time now that this winter wave of the pandemic is much worse than the summer’s, and the economic data is bearing that out now.

Leisure and hospitality drove almost the entire decline in payrolls, losing a whopping 498,000 jobs as the resurgent pandemic once again shuttered restaurants, bars and other venues. Education (including educational services and state and local education) shed 82,700 jobs in total as well.

Surprisingly, job losses were very concentrated with most other industries recovering slightly in December. Regardless, almost every industry is still deep in the economic hole.

The unemployment rate was flat at 6.7 percent, in the first month of no improvement since April. However, the stagnation in unemployment understates the issue as 115,000 workers fell out of the labor force and the misclassification issue worsened in December, rising to +0.6 percentage points from +0.4 in November.

Temporary layoffs rose to 3 million from 2.8 million, the first increase since April. Permanent layoffs actually fell to 3.4 million from 3.7 million. Permanent layoffs spiked early in the crisis, but have held flat in the last few months. This is hopefully a sign that the spike in layoffs will be transient once the pandemic is under control and businesses can recall furloughed workers.

To speak with Daniel Zhao about this report, please contact pr@glassdoor.com. For the latest economics and labor market updates follow @DanielBZhao on Twitter, connect on LinkedIn, and subscribe to Glassdoor Economic Research.