The numbers: The U.S. gained a lackluster 210,000 new jobs in November even though businesses took more aggressive steps to hire people, a disappointing increase that shows the worst labor shortage in decades is still a drag on the economic recovery.
The increase in hiring — the smallest in a year — was way below Wall Street’s expectations. Economists polled by The Wall Street Journal had forecast 573,000 new jobs.
The U.S. jobless rate fell to 4.2% from 4.6% and touched a new pandemic low. Economists say the official rate likely underestimates the true level of unemployment by a few percentage points, however.
Yet in another encouraging sign, the size of the labor force grew substantially. Some 594,000 people rejoined the labor force in November, based on a separate survey of households
The so-called rate of participation rose two ticks to 61.8% and reached the highest level since the start of the pandemic.
The household survey also showed a much larger 1.14 million people found work in November, but it’s a more volatile number than the poll of businesses from which the government derives the official increase in employment.
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Businesses have sought to cope with a labor-market shortage by increasing pay and benefits. Hourly pay rose sharply again last month and wages have climbed 4.8% in the past year. The last time wages rose that rapidly before the pandemic was in the early 1980s.
Big picture: Businesses still can’t attract enough workers fast enough to meet their needs.
At the current pace of hiring, employment levels in the U.S. might not return to pre-crisis trends for two years — or more. The longer the labor shortage persists, the longer it will take for the U.S economy to make a full recovery.
What’s the holdup?
An unusually higher number of people retired during the pandemic and millions more are still too anxious to return to work. They fear exposure to the coronavirus or worry they might have to stay home to care for their kids, especially if new strains of the coronavirus emerge and shut down schools again.
The increase in the size of the labor force in November was good news, but it remains to be seen if the uptrend is sustained.