Companies desperate for workers
Despite Omikron high demand for good employees
Omicron was to wreak havoc on the job market. But that was not the case.
The spike in hiring in January has shown the economy is increasingly in a position to weather renewed waves of coronavirus cases, suggesting that the tight labor market is forcing companies to hold on to employees as hiring begins employees has become more expensive and difficult.
Unlike previous virus waves, where companies quickly shut down operations and laid off employees, many companies are now making increasing efforts to retain their employees. Overall, US employers added 467,000 jobs in January, with much of this growth concentrated in hotels, restaurants, retail and other service sectors.
"Millions of workers were absent due to illness, office reopening faltered, hiring and job hunting slowed - yet the upswing continued," said Julia Pollak, chief economist at ZipRecruiter. "Employers didn't cancel any job advertisements and fled. Hiring figures remained robust and in the end the economy barely sneezed."
Had the earlier pattern between Covid cases and employment held true, the spike in cases in January would have resulted in 2.3 million job losses, she said. Instead, companies of all kinds have learned to adapt quickly. For example, restaurants and shops are increasingly offering curbside pickup and takeaway, and office workers are increasingly able to work remotely again. Vaccinations and other preventive measures like masks have made it safer for employees to continue working even during a spike in cases.
"Companies and employers are learning to live with the virus," Labor Secretary Marty Walsh said in an interview. "Companies have adapted and adjusted. They are learning how to deal with these circumstances."
Such is the case with Basic Fun, a Florida toy company. Managing Director Jay Foreman said he is coping better with the uncertainties of Covid. When the first Omicron cases began to emerge late last year, he reinstated mask requirements for employees at the company's Boca Raton headquarters, but kept everything else moving. He has hired 15 people so far this year and hopes to add at least six more to his workforce of about 100 employees in the US.
That's a significant reversal from the sweeping action he took in March 2020, when he laid off 10 percent of his workforce in anticipation of Covid-related disruption.
"We've gotten very good at living with Covid," he said. "This time we haven't closed the office, we haven't told everyone to work remotely. We have a better understanding of the fears and the science but also the realities of our business."
At the start of the pandemic, US companies resorted to mass layoffs, which caused the unemployment rate to rise into double digits in the first two months of the pandemic. In contrast to other prosperous countries, where companies were much more willing to keep their employees, even if there was hardly any work.
But the tightening of the labor market over the past year has shown firms how difficult it can be to hire new workers quickly enough to keep up with the rapid recovery.
At the end of last year, employers reported 10.9 million job vacancies, significantly more than before the pandemic, with the greatest 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 the all-time high in layoffs in November, 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 numbers of seasonal workers in January regardless of the pandemic, are doing so this year amid difficulties in attracting and retaining service-sector workers , less likely to do.
"Companies are hoarding workers," said Mickey Levy, chief US economist at Berenberg Capital Markets. "With such an extraordinarily tight job market, companies just didn't want to lay people off because the cost of recruiting and finding new employees is very high."
In New York, Sarita Ekya continued to pay all 11 full-time employees at her Manhattan restaurant S'MAC (which stands for Sarita's Macaroni & Cheese) even when it was closed in late December and early January due to an Omicron outbreak.
"I had a firm belief that even when business was bad, my staff was the backbone of our restaurant and should be paid," she said. "You hear about companies struggling to find staff, but many of my employees have been here for ten years and I want to keep them.
She's found creative ways to keep staff busy when sales aren't so great, such as expanding the restaurant's online shipping capabilities or redesigning the basement. She hopes that business will pick up again in the spring.
Nearly 7 million new jobs have been added in the US over the past year as the economy has recovered since the early days of the pandemic. Of the 22 million jobs lost in early 2020, the economy is short of just 3 million - a faster job recovery than after the Great Recession.
"America is back to work," President Biden said Friday at the White House. "Our country has weathered everything that climate change has done to us, and we have come out stronger... America's job machine is stronger than ever."
That's not to say the Omicron variant didn't cause significant turbulence. The number of workers working fewer hours or absent from work due to illness or childcare interruptions hit a pandemic peak of 4.6 million, up from 2.6 million in December.
The number of people unable to work because their employers were out of business more than doubled from December to January, from around 2 million to over 4 million. However, this is still far less than the number of workers who were out of work when the pandemic began.
Even as the public health crisis deepened last month, many entrepreneurs said demand for their products and services remained strong. Bartesian, a Chicago-based company that makes $369 cocktail machines, tripled sales in January, sparking a scramble to hire enough new employees. The directors said they hope to increase the number of employees from 14 to 34 in the coming weeks.
"Our biggest challenge right now is finding talent," said Managing Director Ryan Close. "That's really what keeps me up at night: recruiting people for everything from customer service to supply chain and operations to marketing. We needed all of these people in the door yesterday."
Madeline Snyder took a seasonal job at a clothing store in the mall ahead of the holidays but was quickly hired on in early January. Her employer was very accommodating, even when she tested positive for the corona virus and had to take two weeks vacation.
"I kept getting scheduled and finally told I was a permanent employee," said 18-year-old Snyder, who lives in Santa Rosa, California. "I was a little surprised."