New York – The US economy added 379,000 jobs last month, far more than economists expected, indicating that the labor market recovery is finally gaining momentum.The January figures were also sharply revised upwards to 166,000 jobs added from the 49,000 initially reported.
The hospitality and leisure sector added the most jobs in February with 355,000 new positions, as some restrictions were removed to stop the spread of covid-19. The sector is still recovering from a harsh winter, reopening lost positions rather than creating new jobs.
The unemployment rate
The unemployment rate, which only counts people actively seeking work and not those who have completely retired from the workforce, dropped to 6.2% from 6.3% in January. It was forecast to stay flat.
Economists agree that the official unemployment rate probably does not report how many people are actually unemployed as a result of the pandemic.
For example, 4.2 million people who left the workforce were prevented from seeking a new job due to the February pandemic, the Bureau of Labor Statistics said.
“Today’s report shows green shoots of recovery,” said Daniel Zhao, Senior Economist at Glassdoor. “But I also think the report is a little weaker than the headline figures show.”
So the good news on Friday is only part of the recovery story.
The United States still has 9.5 million fewer jobs than in February last year. While that number is finally dropping, millions of workers have to rely on government help to make ends meet. Despite the good news in Friday’s report, “there is still a lot of wood to cut,” commented BMO senior economist Sal Guatieri.
On Thursday, the Labor Department reported that more than 18 million people received benefits under various government programs in the week ending February 13.
And the labor force participation rate was flat at 61.4% in February. It hasn’t been this low since the 1970s.
Inequality in recovery
Economists and politicians call the recovery “K-shaped” because it is not working for everyone. While many white-collar workers and people who invest in the stock market have seen their wealth rise through the pandemic, lower-wage workers struggle to pay for their basic needs.
A look at how different demographics fared in February offers further evidence of the uneven recovery, although economists caution that monthly data may be volatile.
The Asian unemployment rate fell to 5.1% last month from the previous 6.6% on record, marking the largest improvement of any demographic measured in the report.
White and Hispanic unemployment rates fell 0.1 percentage point each, to 5.6% and 8.5%, respectively.
Both Asian and Hispanic employment was likely driven by gains in the hospitality and leisure sector, where both groups are disproportionately represented, Zhao said.
Meanwhile, the unemployment rate for black workers was the other way around: it jumped to 9.9% from 9.2% before. The current rate is “just below the peak of the Great Recession,” wrote Elise Gould, a senior economist at the Institute for Economic Policy.
“One of the big concerns for recovery in the future is that a high tide does not lift all boats,” Zhao said.
In February 2021, before the pandemic hit, the unemployment rate for blacks was 6%. So if the unemployment rate for whites is too high at 5.7% during the pandemic, it means that the unemployment rate for blacks was not low enough in normal times, Zhao added.
“Passing large-scale relief measures is now an imperative for economic and racial justice,” Gould declared.