News: Experts Remain Cautiously Optimistic as Joblessness Claims Drop
Joblessness claims continue falling, but what’s in store for 2022?
Contributing Writer at Tally
January 7, 2022
Throughout 2021, jobs reports have been steady, as the American worker begins emerging from the COVID-19 pandemic with plenty of job options. In the November report, this was very evident, with joblessness claims falling to just 222,000 in the week ending November 27.
That’s lower than the 240,000-claim estimate from Dow Jones and brings the American job force closer to the pre-pandemic joblessness claims of just 220,000 per week.
Additionally, only 1.96 million Americans were collecting unemployment compensation in the week ending November 27. That was a 100,000-person drop from the week prior.
These drops are great for the here and now, but let’s review what happened in the 2021 job market and what experts predict will happen in 2022.
2021 rebound was a surprise
When the job market took its initial hit in 2020, and unemployment soared (21 million jobs were lost in April 2020 alone) experts anticipated a slow recovery through 2021. However, fueled by multiple rounds of stimulus money and child tax credits, Americans began spending, and demand for workers returned to 99% of the pre-pandemic levels.
“2021 was a surprise, I think, to all economists,” said Glassdoor senior economist Daniel Zhao.
Zhao continued, “At the beginning of the year, we were concerned about whether we would get a strong enough recovery to get anywhere close to the labor market before the pandemic. And in some ways, we’ve passed that.”
The employment issue is now on the other side
With high demand for workers and plenty of Americans still out of work, one would think hiring would be simple. Unfortunately, 2021 has been an odd year because the issue is workers who aren’t willing to return to the workforce.
While worker demand has returned to 99% of its pre-pandemic levels, the number of people willing to work has remained below normal levels since May 2020. In fact, this has been the lowest labor force participation following a recession in history.
So, what caused the labor shortage? In its monthly Household Pulse Survey, the Census Bureau initially found people were wary of returning to work amid a pandemic, and new variants cropping up likely only reduce confidence in returning. It also found a huge uptick in unexpected retirements during the pandemic. In November 2021 alone, 1.5 million more American workers retired than expected.
The Pulse Survey also noted many workers were unable to return to work because of childcare issues, while others simply said they had no desire to work.
Younger workers between 16 and 24 have filled some of the retirement gaps, but the exodus has far outweighed the inflow of young workers.
What 2022 has in store for employment
As we bid farewell to 2021 and welcome in 2022, uncertainty is still plentiful. Experts anticipate strong economic growth in 2022, as some forecasts place GDP growth at 3.5%. Much of this growth should come from hard-hit sectors like restaurants, hotels, entertainment and travel.
This should drive employment numbers upward, but there’s the lingering issues of COVID-19 variants. Currently, the U.S. is watching the Omicron variant and still fighting the Delta variant. There is still more research needed to determine the severity and transmissibility of the Omicron variant, but if it proves easier to transmit and surges, it could put a damper on this growth or even set us back.
Experts also expect the labor shortages to continue, and an Omicron surge could trigger more Baby Boomers to retire, tightening the shortage. However, with this shortage will come the opportunity for higher wages and lower education requirements for workers willing to join the workforce in 2022.
The big takeaway for 2022 at this point is to wait and see what the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO) learn about Omicron. This will likely have a massive impact on our economy and jobs in the new year.