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How sick did the omicron variant make the job market?

STEVE INSKEEP, HOST:

Omicron infected millions of people in January, but the job market held up much better than many forecasters expected. The Labor Department said this morning that U.S. employers added 467,000 jobs last month. Job gains for November and December were also revised upward by a lot. NPR chief economics correspondent Scott Horsley is here. Hey there, Scott.

SCOTT HORSLEY, BYLINE: Good morning, Steve.

INSKEEP: What do the numbers tell us?

HORSLEY: They tell us that the pandemic punch was not as painful as a lot of analysts had expected. You know, there had been a lot of apprehension about this report because the Labor Department conducted its January jobs tally just about three weeks ago, which is right around the time the coronavirus infections were hitting a peak of more than 800,000 a day. And analysts thought that would depress demand for workers, especially at in-person businesses like restaurants, and also maybe keep some people who would be working on the sidelines. That probably did happen, but the fallout was much milder than expected. And we also know now that job gains in November and December were way better than initially reported - more than half a million jobs in December, nearly 650,000 in November. So the U.S. economy came into the omicron wave with more momentum than we thought.

INSKEEP: I feel obliged to pause here for a moment because these jobs numbers were a big part of the national political debate at the end of last year. And, of course, there were a lot of Republicans saying Biden is a failure. Look at these terrible jobs numbers. Biden is failing, failing. Now, Biden may well be failing - it's not mine to judge - but we know now that this was all a fantasy, that these numbers were just - and they're frequently revised. We could know at the time they might be revised, and now we know that the numbers are better than people thought at the time.

HORSLEY: Yes.

INSKEEP: So what does this mean for job growth going forward?

HORSLEY: Well, we already know that the omicron wave has started to fade. You know, this was a very sharp spike but also a fairly short spike. And Elise Gould, who's a senior economist at the Economic Policy Institute, says daily infections have already fallen by more than half from where they were in the middle of last month.

ELISE GOULD: We see them coming down by the end of January. The question is then how quickly will they come down? And that's really a public health expert question. But you could see a recovery as early as February and certainly March if we can start putting the pandemic behind us.

HORSLEY: We also know that employers have a lot of open jobs they'd like to fill. There were nearly 11 million job openings at the beginning of January. Some of those may have been frozen during the omicron wave, but they might start to thaw pretty quickly. And so we could see even stronger hiring in the months to come.

INSKEEP: And where are employers likely to find the people to fill those jobs?

HORSLEY: Well, that has been a challenge. You know, millions of people left the workforce during the pandemic. Some of them have been slow to return, but there's encouraging news in today's report about that as well. It shows more than a million people entered the workforce in January. And the share of people either working or looking for work inched up. Gould thinks we could see even more of that as the public health outlook improves.

GOULD: As it becomes safer and as fewer people are sick, they can participate more fully in the labor market, and we will see that return. And unfortunately, one of the byproducts of that will be as workers are less scarce, they may not have the same kind of leverage they had in the fall to be able to bid up their wages.

HORSLEY: Employers have been having to pay higher wages and offer better benefits over the last year as they compete for scarce workers. That has been one of the factors the Federal Reserve's been concerned about that's contributing to inflation. But the strong growth in the workforce in this report offers some hope that at least one contributing cause of inflation, labor shortages, may be easing.

INSKEEP: Scott, thanks.

HORSLEY: You're welcome.

INSKEEP: That's NPR's Scott Horsley. Transcript provided by NPR, Copyright NPR.

Rachel Martin is a host of Morning Edition, as well as NPR's morning news podcast Up First.
Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.