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Employers added 199,000 jobs in December — less than half of forecasters' prediction

AUDIE CORNISH, HOST:

Restaurants, factories and construction companies all added workers last month, but a lot fewer than forecasters had expected. The Labor Department said today the U.S. employers added just 199,000 jobs in December. And that's the slowest pace of hiring seen in all of last year. Now, there's some encouraging news in the report. The unemployment rate fell to just 3.9%. That's the lowest it's been since the beginning of the pandemic. Now, to help make sense of this unusual job market, we're joined by NPR's Scott Horsley.

Welcome back, Scott.

SCOTT HORSLEY, BYLINE: Good afternoon.

CORNISH: Let's talk about in this difference between the forecast versus what happened.

HORSLEY: Yeah. There's definitely some red faces and some head scratching among forecasters the expected pickup in job growth did not occur. In fact, we saw fewer jobs added in December than the month before. The pattern in recent months has been for the initial jobs numbers to be revised upwards. And we certainly could see that here. But for the moment, White House economist Cecilia Rouse acknowledges the 199,000 jobs added in December is well below what the market was expecting.

CECILIA ROUSE: That reflects a little bit of slowing, but it's still fairly strong growth in any other year.

HORSLEY: And it's true that in normal times, a month with almost 200,000 jobs added would be considered good. But keep in mind the country's still more than 3 1/2 million jobs short of where it was when the pandemic started. And at this rate, it would take another year and a half to fill that gap.

CORNISH: How much is the spike in new infections tied to the omicron variant affecting job growth?

HORSLEY: You know, it may be having some effect, but the jobs tally is actually conducted in the middle of the month. And the big jump in omicron cases came after that. So we're more likely to see the economic fallout in the January jobs numbers. If people aren't going out to eat as much, for example, because they're nervous about catching COVID, then restaurants won't need as many cooks and servers. And, of course, some would-be workers may decide to stay on the sidelines until this latest wave of infections has passed. Forecasters are hopeful that as sharp as the omicron spike has been, it may also prove to be relatively short. But as we've seen throughout the last couple of years, it's hard to have a healthy job market when you don't have a healthy population.

CORNISH: So put that low unemployment rate in into context for us. What's going on?

HORSLEY: Yeah. The jobs number comes from a survey of businesses. But the unemployment rate is calculated from a different survey of households. And this is the second month in a row that those two surveys have painted somewhat different pictures of what's happening in the economy. The household survey showed much stronger job growth than the business survey did, and that's why you see that big drop in the unemployment rate. You know, an unemployment rate of 3.9% is really low. A year ago, that rate was 6.7%. And at the worst of the downturn, back in the spring of 2020, the unemployment rate was almost 15%.

CORNISH: Plus, there's been so much reporting on the job openings that are going unfilled. What does this mean for businesses and for workers?

HORSLEY: Yeah. There are more job openings now than there are people looking for work, and that's giving workers an unusual degree of bargaining power. A record number of people quit their jobs in November. But in most cases, they're not leaving the workforce altogether. They're just moving on to often better jobs. Steven Oxford, for example, is an accountant in Atlanta. He recently quit a job he'd been in for seven years and took a similar job that's paying him 25% more.

STEVEN OXFORD: It's kind of a high-demand field, so probably once or twice a week, I get messages through LinkedIn from some recruiter. So a recruiter reached out to me and - because it was something that kind of was a fit, I had a conversation, and, you know, it ended up working out.

HORSLEY: Some people have been calling this a great resignation, but one economist I talked to said we should really call this the great job hop. There's just a lot of churn in the job market. And for many people, this is a chance to try something new. And, Audie, that can be a good thing even if there are some tears along the way.

CORNISH: Thanks so much. That's NPR's Scott Horsley. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.