The Labor Department’s Friday report that 245,000 jobs were added in November confirms that, while an economic recovery is still underway, its momentum is being steadily drained by the continuing lockdown response to the COVID-19 crisis. Policy makers responding to the recent surge in infections and hospitalizations with a return to strict lockdowns have good intentions, but they should nevertheless reconsider the wisdom of their policies. While it is still likely months away, the news on vaccine front is nevertheless positive and its not clear that benefits of returning to full lockdowns in the meantime will outweigh the harm.
While the overall unemployment rate fell to 6.7 percent, it is still almost twice the February 2020 rate of 3.5 percent, with almost 5 million jobs still lost. Worse, while we’ve had six straight months of gains, that rate is declining, and there are signs that people are having trouble getting jobs. Another 385,000 were added to the ranks of the long-term unemployed, and the labor force participation rate marginally declined to 61.5 percent in November, a drop of two tenths of a percentage point. It’s not as though people aren’t looking. The number of unemployed people who are searching for a job increased by 448,000 to 7.1 million.
Yet, a total of 3.9 million people were prevented from looking for work in November due to the pandemic. Employers say that, even when they are hiring, they often cannot fill jobs because COVID-19 restrictions have kept people at home. “Finding qualified workers for open positions has only gotten worse as the pandemic caused an even tighter labor market. A surge in the labor force participation rate would be welcome news to small employers,” said National Federation of Independent Business chief economist Bill Dunkelberg.
Employers who have only barely held on still face several more uncertain months. Cities have seen a worker exodus leaving office buildings empty and hurting businesses that catered to those office workers. The restaurant industry has warned that, “Given the rising restrictions on indoor dining and the likelihood of significantly scaled-back holiday celebrations, business conditions will remain extremely challenging in the coming months.”
There is good reason to believe that 2021 will see progress on the vaccine front and, with that in mind, we must address the economic impact of the virus, too. The price of the lockdown will have to be paid eventually, and it will be painful. Five million jobs are still gone. Governments at all levels have racked up piles of debt. Private citizens’ savings have been drained. Children’s education has been severely disrupted. Entrepreneurialism has been largely blocked. These are problems that will inflict real pain on real people.