The recovery in the US jobs market collapsed in December, the last full month of Donald Trump’s presidency, as coronavirus infections soared across the country.
The US lost 140,000 jobs in December, down from a gain of 245,000 in November, according to the Bureau of Labor Statistics (BLS). The loss ended seven months of jobs growth with the leisure and hospitality sector once again bearing the biggest losses.
The unemployment rate stayed at 6.7%, close to twice as high as it was in February before Covid-19 hit the US. It is also three percentage points higher than the 4.5% rate Trump inherited from his predecessor Barack Obama.
Some 372,000 jobs were lost in food services and drinking places, offsetting gains in other areas, as Covid-19 infections and deaths rose sharply across the country. “The decline in payroll employment reflects the recent increase in coronavirus (Covid-19) cases and efforts to contain the pandemic,” the BLS said.
Four million Americans have been unemployed for 27 weeks or more – technically defined as long-term unemployed – accounting for 37% of those out of work. Unemployment rates for black (9.9%) and Latino (9.3%) workers remained sharply higher than for white Americans (6%).
After months of wrangling Congress passed a $900bn stimulus package in December but the relief came too late for many. Joe Biden has pledged more aid for those hit by the pandemic’s economic fallout but areas like hospitality are likely to continue suffering until the virus is under control.
Friday’s latest jobs report comes after months of worrying signs in the jobs market. On Thursday the labor department said another 787,000 people had filed first-time claims for jobless benefits in the week ending 2 January. The figure was slightly lower than the previous week but remained more than twice as high as pre-pandemic levels.
On Wednesday ADP, the US’s largest payroll supplier, said the private sector had shed 123,000 jobs from November to December, the first decline since April 2020. Losses were primarily concentrated in retail, leisure and hospitality – all areas that suffered heavy losses in the first wave of the pandemic. On the same day minutes from the last Federal Reserve meeting showed policymakers expected the escalating number of coronavirus cases “would be particularly challenging for the labor market in coming months”.
The crisis has left millions of Americans facing food shortages and homelessness as unemployment officers across the country have struggled to keep up with the huge numbers of claims.
According to the Associated Press only three states, North Dakota, Rhode Island and Wyoming, have met the federal standard of getting benefit payments out to successful claimants within three weeks for 87% of applicants.