While there's no debating that people are continuing to quit their jobs at record rates, the most recent job numbers signal that perhaps certain sectors are seeing measures of recovery. In the month of December, non-farm payrolls were only up 199,000 -- compared to the forecast 422,000 -- but unemployment declined again to 3.9%, down from November's unemployment rate of 4.2%.
In this segment of Backstage Pass, recorded on Jan. 7, Fool contributors Toby Bordelon & Will Healy discuss their individual takes on the current state of the labor market.
Toby Bordelon: What do you think, Will? Rachel think it's positive, you share her thoughts, or are you more on the negative side here?
Will Healy: I had mixed feelings about that. Yeah, it was a little surprising that the number came in so low. But like Rachel said, I think Omicron is really the culprit behind that.
A lot of people have been getting it, even vaccinated people, I actually went through it over Christmas break myself. It's been a huge factor that really hasn't been talked about. What has been talked about a lot is the 4.5 million people quitting their job, that was the big headline that we saw this week.
I think a variety of things are going on. I was reading one report today talking about, I think a professor at Texas A&M was saying that because people were unemployed during COVID and they've been working in home, they had a lot of time to reevaluate their lives, so there could be a lot of, I won't say non-scientific per se, but factors that we don't really think about.
I also want to note that I always look at the U-6 number when unemployment numbers come out. The number that we typically see is the U-3 number. The U-3 number is only people actively looking for work, whereas the U-6 number includes discouraged and underemployed workers, and that never was 7.3%.
Now, it is coming down, but again I think it really reflects unemployment a lot better because it includes U.S. workers that are underemployed or discouraged. That was a big problem during the financial crisis in, during the early days of the pandemic.
Where during the early days of the pandemic the U-6 number briefly went above 20%. I think that's the real unemployment number, so, I think you really have to look at those workers as well. Like Rachel said, the numbers are coming down so that certainly is positive.
Bordelon: Yes, that's a good point. Look at the broader number there. When you look at it, you've got what?
You mentioned, the 4.5 million people who quit their job in December, everyone was talking about that. But even with that, that unemployment number is coming down, so it does suggest that people who are quitting aren't just necessarily quitting.
Healy: Right.
Bordelon: They are getting another job. What seems to be fairly easy to do right now. I wonder how much of that jobs number being lower than expected was from I expect more of that as employers not able to hire people versus not wanting to hire people.
That's good news. Wages are up more than expected too. That was mentioned in this report, 4.7% year over year, so that's good.
The industry that saw the biggest gains was leisure and hospitality, which that's encouraging to me. Because that's the one that got hit so hard in the pandemic, so we're seeing the big gains coming in the hard hit industries. That's good.
It suggests an overall recovery I think. The other point I noticed here is that we apparently had more jobs at the end of December, more jobs on record than any other year in history at the end of the year. Yes, you can take the raw number because population has grown throughout history, so that is part of it. But that's a good sign.
More people are working than ever before, so that's a good sign of the overall economy in terms of our overall output. I see good signs too. I struggle to find a necessarily negative aspect of this.
You might start to get worried about things like inflation, there are some issues that started crop up if the job market is too tight, and part of that is productivity could go down.
Production could go down because employers simply cannot find people to do the work. You start to worry about that with some of these numbers maybe. We'll see how the year develops.
But I think overall it was a positive end for the year. Certainly much better than 2020 was for us in terms of labor market trends in terms of the economy, and we will see what that does for us.
