ON THE DECEMBER JOBS REPORT
Today’s jobs report continued to show a positive but muddled picture of the labor market. The Bureau of Labor Statistics reported that payroll employment increased by 199,000 in December, which was well below expectations. This follows a softer than expected November, but also continued positive revisions to the initial estimates. Separately, the BLS household survey showed that unemployment continued to drop rapidly, falling to 3.9 percent, nearing pre-pandemic levels. After slower progress in early 2021, the unemployment rate dropped a full 2 percentage points in the last six months of the year.
Combined with the continued high levels of job openings reported earlier this week, today’s report suggests a tight labor market. Workers are quitting and moving to new jobs at a record pace, but net hiring is not keeping pace with demand for workers by businesses. The fading of the fiscal stimulus and record government transfers has drawn workers back to the labor market.
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Noah Williams is an adjunct fellow at the Manhattan Institute and the Juli Plant Grainger Professor of Economics and director of the Center for Research on the Wisconsin Economy at the University of Wisconsin–Madison.