Omicron was supposed to wreak havoc on the labor market. But it didn’t.
The jump in January hiring has underscored the economy’s growing capacity to weather renewed waves of surging coronavirus cases, suggesting a tight job market is forcing companies to retain workers now that hiring new ones has become costlier and more difficult.
Unlike previous waves of the virus, when businesses were quick to pause operations and lay off workers, many are now going to greater lengths to hang on to their employees. Overall, U.S. employers added 467,000 jobs in January, with much of those gains concentrated in hotels, restaurants, retailers and other services.
“Omicron was hugely disruptive — millions of workers were absent due to illness, office reopenings stalled, hiring and job searches slowed down — and yet the job recovery continued,” said Julia Pollak, chief economist at ZipRecruiter. “Employers did not yank job postings and run for the hills. Hiring remained robust and in the end, the economy barely sneezed.”
U.S. added 467,000 jobs in January despite omicron variant surge
If earlier patterns between covid cases and employment had held true, she said the spike in illnesses in January would’ve translated to 2.3 million job losses. Instead, businesses of all kinds have learned how to quickly adapt. Restaurants and stores are increasingly offering curbside pickup and takeout, for example, while offices are allowing more employees to return to working remotely. Vaccines and other preventive measures like masks have also made it safer for employees to continue working even during a surge in cases.
“Businesses and employers are learning how to live with the virus,” Labor Secretary Marty Walsh said in an interview. “Companies have adapted and adjusted. They’re learning how to work with these circumstances.”
That’s the case for Basic Fun, a toymaker in Florida. Chief Executive Jay Foreman said he’s gotten better at rolling with the uncertainties of covid. When omicron cases began popping up late last year, he reinstated a mask mandate for employees at the company’s headquarters in Boca Raton but kept everything else moving. He has hired 15 employees so far this year, and hopes to add at least six more to his workforce of roughly 100 U.S. workers.
That’s a stark reversal from the sweeping measures he took in March 2020, when he laid off 10 percent of his workforce in anticipation of covid-related disruptions.
“We have gotten very good at living with covid,” he said. “This time around, we didn’t close the office, we didn’t tell everybody to work remotely. We have a better understanding of the fears and the science, as well as the realities of our business.”
Early in the pandemic, U.S. companies resorted to mass layoffs, causing the unemployment rate to surge to double-digits for the first two months of the pandemic. This contrasted with other wealthy nations, where companies were much more likely to keep workers on their payrolls, even if there was little work to do.
4.3 million Americans left their jobs in December as omicron variant disrupted everything
But the past year’s labor market shortages have shown companies just how difficult it can be to hire back workers quickly enough to keep up with the rapid recovery.
Employers reported 10.9 million job openings at the end of last year, well above pre-pandemic averages, with the biggest need for workers in restaurants, bars and hotels. At the same time, more than 4 million Americans quit or changed jobs in December — down from November’s all-time high of quits but still near record levels, according to the Bureau of Labor Statistics.
As a result, economists say industries like retail, leisure and hospitality — which tend to lay off large swaths of seasonal workers in January regardless of the pandemic — were less likely to do so this year, given the difficulties of attracting and retaining service-sector workers.
“Businesses are hoarding labor,” said Mickey Levy, chief U.S. economist at Berenberg Capital Markets. “With such an extraordinarily tight labor market, businesses just didn’t want to lay people off because the cost of searching around and finding new employees is very high.”
In New York, Sarita Ekya kept paying all 11 full-time employees at her Manhattan restaurant, S’MAC (which stands for Sarita’s Macaroni & Cheese), even while it was closed in late December and early January because of an omicron outbreak.
“I felt very strongly that even though business is slow, my staff is the backbone of our restaurant and should be paid,” she said. “You hear of businesses struggling to find help, but many of my employees have been working here for a decade and I want to keep them.”
She has found creative ways to keep workers busy when sales are slow, by building up the restaurant’s online shipping capabilities, for example, or revamping its basement. She’s hopeful that business will pick up again in the spring.
Over the past year, the U.S. has added nearly 7 million jobs as the economy rebuilds from the early days of the pandemic. The economy is short just 3 million of the 22 million jobs that were lost in early 2020, a faster-paced recovery of jobs than after the Great Recession.
“America is back to work,” President Biden said Friday at the White House. “Our country is taking everything that covid has had to throw at us and we’ve come back stronger … America’s job machine is going stronger than ever.”
Despite Omicron hurdles, strong economic recovery appears on track
That’s not to say that the omicron variant didn’t cause considerable turmoil. The number of people who were employed but worked fewer hours or were absent from work due to illness or disruptions in child care reached a pandemic high of 4.6 million, up from 2.6 million in December.
The number of people who were unable to work because their employers lost business more than doubled from December to January, from roughly 2 million to over 4 million. This is still, however, far below the number of workers sidelined earlier in the pandemic.
Even as the public health crisis intensified last month, many business owners said demand for their products and services remained strong. Sales at Bartesian, a Chicago company that makes $369 countertop cocktail machines, tripled in January, setting off a scramble to hire enough new workers. Executives said they’re hoping to go from 14 employees to 34 in the coming weeks.
“Our biggest challenge right now is finding talent,” chief executive Ryan Close said. “That’s legitimately what’s keeping me up at night: recruiting for absolutely everything, from customer service to supply chain, operations, marketing. We needed all those people in the door, yesterday.”
Madeline Snyder took a seasonal job at a mall clothing store in the run-up to the holidays but was quickly made permanent in early January. Her employer, she said, has been accommodating, even when she tested positive for the coronavirus and needed to take two weeks off.
“I just kept being scheduled and eventually was told I was permanent,” said Snyder, 18, who lives in Santa Rosa, Calif. “I was a little surprised.”
Alyssa Fowers, Kate Rabinowitz, Eli Rosenberg and Andrew Van Dam contributed to this story.
Omicron was supposed to wreak havoc on the labor market. But it didn’t.