Restaurants and bars were among the hardest hit, as rising coronavirus infections and cold weather made it harder to operate. Cash-strapped state and local governments laid off thousands of teachers and other public employees.
Amid fresh signs of economic weakness, President-elect Joe Biden said Congress must act quickly on his proposal for additional federal relief beyond last month’s $908 billion package.
“We need to provide more immediate relief for working families and businesses now,” Biden said. “Not just to help them get to the other side of this painful crisis, but to avoid the broader economic costs due to long-term unemployment, hunger, homelessness and businesses failing.”
The gloom is unmistakable, but it could lift in a matter of months — if the sluggish introduction of coronavirus vaccines accelerates, freeing the economy from the pandemic’s grip.
Still, the disappointing jobs report suggested it will take longer than economists expected to claw back all of the jobs lost during last year’s recession. Employers rehired millions of workers in the summer, yet 9.8 million fewer Americans are working today than were employed before the pandemic. It will likely take more than two years for the United States to return to full employment, many economists say.
After nine months without a job, Danielle Whittenhall, 30, a Chicago bartender, despairs of ever again finding work in the nightlife industry. Since the nightclub and sports bar she worked at closed in March, she has cycled between living in her car and on a friend’s couch, surviving on the $560 in state unemployment benefits she receives every other week.
“It’s been a tough thing to navigate through,” she said.
In Wilmington, Del., Biden said “the anxiety and fear” in the country was reminiscent of January 2009, when he was sworn in as vice president amid a global financial crisis. Joblessness is particularly high for Black and Latino households, with unemployment rates topping 9 percent compared with 6 percent for Whites.
Battling dual health and economic crises, the new administration faces a more complex policy challenge, economists said. More contagious variants of the coronavirus have been detected on U.S. soil. And on Thursday, the country set a new single-day fatality record, with more than 4,000 deaths.
Vaccines offer hope of a return to normal activity later this year, but the pace of their rollout over the past month has been disappointing. Even as the Biden team draws up plans to speed that process, workers and businesses in industries affected by social distancing need financial support to help them survive.
“Until the virus is under control, until people can freely engage in economic activity again, there is one hand tied behind the economy’s back,” said Heidi Shierholz of the Economic Policy Institute, a left-leaning think tank. “That is totally different than what Obama-Biden faced when they came in.”
Sarah Sheets, 46, who operates a day care in Ingram, Tex., is among those the virus sideswiped. When the pandemic hit in the spring, demand for her services evaporated, leaving her to rely on unemployment benefits. Until the end of July, when an emergency federal program expired, she received $600 a week in addition to her regular state benefits. But for the final five months of the year, she got by on $160 in state assistance each week.
“We didn’t have Christmas this year,” she said. “I had $200 for four children and dinner. It’s not going to be the same ever again."
Sheets has just started receiving the extra $300 a week in jobless aid Congress approved last month. She said she’s hoping for more help after Jan. 20, when the Democrats will control the White House and both sides of Capitol Hill.
“It would be enough to have to deal with the fact that there was a virus,” she said. “But then the financial part of it has just pushed us over into a very difficult situation. ”
The unemployment rate stayed level at 6.7 percent in December, according to the report, from the Bureau of Labor Statistics (BLS).
Employment in leisure and hospitality industries declined by 498,000, the majority of that at restaurants, bars and other food service establishments, which have struggled amid limitations from cold weather and a new round of restrictions across the country.
Employment in another tourism-related category — amusements, gambling and recreation — fell by 92,000. Government employment declined by 42,000. These declines offset modest gains in other sectors, such as professional and business services, retail and construction.
Still, other parts of the $21 trillion U.S. economy continued to power ahead. Retailers showed surprising strength, adding 121,000 jobs, while home builders boosted construction hiring. Manufacturers added 38,000 jobs and warehouses added workers, too, as e-commerce orders boosted demand.
While the job market is sagging under the pandemic’s weight, the economy is expected to roar back in the second half of the year. The introduction of two vaccines for the coronavirus offer hope of a gradual resumption of normal operations for many damaged businesses.
With Democrats in full control of Washington, many economists say prospects for continued government financial assistance also have improved. Richard Clarida, vice chair of the Federal Reserve, said Friday he expects the nation’s central bank to continue supporting the recovery with monthly purchases of about $120 billion in Treasury and other government-backed securities.
The fresh labor market data points to the economic challenges facing Biden, who inherits one of the weakest labor markets in years from his predecessor.
There are 9.8 million fewer jobs in the United States now than last February; 3 million below the level on Inauguration Day in 2017, a track record that undercuts what had been one of Trump’s most frequently touted achievements.
On Friday, Trump — cloistered at the White House amid demands for his ouster following Wednesday’s insurrectionist riot at the U.S. Capitol — offered no public remarks about the economy.
“It’s a damaged labor market,” said Augustine Faucher, chief economist at the PNC Financial Services Group. “But it is a labor market that is poised for recovery, given the fact that we are seeing the vaccine. With support from the federal government and support from the Federal Reserve, it could see a strong rebound over the next few years.”
The economy shed 22 million jobs between February and April with the onset of the pandemic and has regained just over half. Economists have long warned that delays renewing the packages that offered aid to businesses, families and unemployed individuals would have costly effects on the broader economy.
The pandemic’s imprint is evident in just about every corner of the economy. Nearly a quarter of employees teleworked in December, up about a percentage point from November. An additional 15.8 million people said they had been unable to work because their employer closed or lost business due to the pandemic.
Some 4.6 million people who were not counted as part of the labor force were prevented from looking for work due to the pandemic, the BLS reported.
Taking into account the shrunken labor force, a true measure of unemployment would be close to 9.5 percent, said Gregory Daco, chief U.S. economist for Oxford Economics.
Although job growth is expected to be robust once large numbers of Americans are vaccinated, the economy at year end will still be short roughly 4 million jobs, he said.
Government employment declined by 45,000 last month, lending credence to the warnings from economists and Democrats about coming job cuts due to budget shortfalls. Republicans resisted a measure for robust state and local government aid as part of the stimulus negotiations in December.
But with a Democratic Congress and White House, the report will likely help fuel Biden’s push for a fresh round of economic aid. The president-elect said Friday that he will unveil next week a multitrillion-dollar relief package.
Still, the next few months are likely to continue to be tough for the labor market as winter and coronavirus-related shutdowns chill the ability of hospitality and restaurant industries to operate and the level of infections remains an obstacle to other attempts to get the economy going.
Questions remain about how restaurants, bars, hotels and other businesses that rely on close personal interactions will endure. More than 110,000 restaurants have closed in the pandemic — about one in six — according to a survey released last month by the National Restaurant Association.
“We’ve got a lot of work ahead of us,” Daco said. “The situation will improve. But we won’t escape unscathed from this crisis.”
Rachel Siegel contributed to this report.