Filings for jobless claims are expected to remain near the lowest levels on record, as workers and businesses contend with a tight U.S. labor market and Omicron-related disruptions.
Initial claims for unemployment benefits, a proxy for layoffs, are estimated to have remained around 225,000 last week, according to economists surveyed by The Wall Street Journal, following an increase for the week ended Jan. 8. The Labor Department will release its report at 8:30 a.m. ET on Thursday.
While the surge in Covid-19 cases is disrupting businesses and leading economists to mark down 2022 growth forecasts, few expect it to change the fundamentals of a labor market with little slack and red-hot demand for workers.
“Someone who’s dependable, who’s been on the job for a year and doesn’t need to learn the ropes—you don’t want to lay that person off when you’re expecting a spring thaw” in economic activity, said
an economist at the human-resources software firm
Wages grew by 4.7% in 2021, and the unemployment rate has dropped to 3.9%, according to the Labor Department. American workers were quitting an average of more than four million jobs a month during the second half of last year through November. The tight labor market has given lower-wage workers, in particular, increased leverage in the workplace.
Quits and job openings are reported with a several-week lag, and there is some evidence that the surge in Omicron cases has slowed growth in job postings by employers, according to the jobs site Indeed.
While the number of job postings is still around 60% higher than the pre-pandemic baseline, the weekly average dropped by 1.3 percentage points for the week ended Jan. 14. Indeed economist
attributed that drop to two factors: Lots of people are out sick, including employers tasked with making hiring decisions, and “uncertainty about consumer demand means it’s hard for businesses to determine how many workers to hire.”
A complicating factor for employers and policy makers is the labor-force participation rate, which measures the share of the working-age population that is either employed or seeking employment. Though it has ticked up in recent months to 61.9%, it remains below the 63.4% level from February 2020.
Reduced savings and a rising share of household debt relative to income may bring more workers off the sidelines, especially given the expiration of many federal support programs, including enhanced unemployment benefits and more recently the beefed-up child tax credit, which Congress hasn’t extended.
“What’s missing in action here is any scent of federal stimulus which might delay a person’s decision to go back to work. That’s going to catch up to working families,” Ms. Richardson said.
The Federal Reserve, meanwhile, is attempting to chart a course out of the worst inflationary period in four decades. Part of the process involves trying to pinpoint when the labor market is truly out of slack and has hit full employment, or whether more workers are likely to return to the workforce as pandemic worries like the threat of infection, inconsistent child-care availability and reduced service-sector demand dissipate.
“If Omicron is truly the last major wave of the pandemic and life returns to normal by March, the second quarter should see a solid rebound in economic activity,” said
chief global strategist for JPMorgan Funds. “However, if Covid lingers, it could continue to restrain leisure and entertainment spending and labor supply throughout the year.”
Write to Gabriel T. Rubin at [email protected]
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