A woman gets a dose of the Covid vaccine

January 2021 Jobs Report Reinforces Need for Vaccinations

May the first jobs report of 2021 also be the worst!

While the unemployment rate fell to 6.3%, there was little sign of improvement in broader labor market conditions in the January 2021 Jobs Report. A relatively weak 49k gain in payrolls accompanied a -159k revision for the prior two months. And the diffusion index (a measure of the breadth of job gains or losses) dipped below 50, indicating that more industries contributed job losses than gains. 

Here are three key takeaways from the report. 

1. Many of the gains were in temporary help services

The professional and business services sector added 97k jobs, 80.9k of which were in temporary help services. Surges in temporary help employment often occur at times when businesses feel uncertain about the long-term outlook. If conditions improve, some of these temporary roles could become permanent. 

2. The leisure and hospitality sector continued to shed jobs 

After losing 536k jobs in December, the leisure and hospitality sector shed an additional 61k jobs in January. High Covid cases made indoor service unsafe and frosty temperatures made outdoor service untenable. Tighter Covid restrictions were also in place in many states. 

But since the reference week in the report, temperatures have started to rise (January is the coldest month of the year), Covid cases have started to decline, and restrictions have since been relaxed in many states and cities. Restaurants, casinos, and hotels should soon get a reprieve, as well as more relief. 

3. The civilian labor force fell by 406k

Americans continue to face pandemic-related barriers to returning to work, such as school closures and health-related concerns about accepting in-person work. The labor force has shrunk by 4.3 million in 12 months after continuing to contract in January. 

ZipRecruiter data suggests, however, that many Americans are prepared to return to work under the right conditions. 68% of active job seekers on ZipRecruiter say they would prefer remote work opportunities.1 And while remote jobs only account for about 9% of current vacancies,2 that share has steadily increased since the start of the pandemic as businesses have adjusted to the new normal. 

As the rollout of vaccines and relief funds accelerates, and as the winter recedes, the labor market should soon return to a more robust expansion. But with the economy short 9.89 million jobs, we still have a long way to go. Today’s jobs report is a clarion call that we need to accelerate vaccination efforts now. 

  1. Findings are based on a survey of 2,843 U.S. job seekers who logged into ZipRecruiter job seeker accounts between January 25, 2021 to February 1, 2021.
  2. ZipRecruiter, Inc. internal data, ZipApply jobs only, December 1, 2020 to January 31, 2021.

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Julia Pollak

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Julia Pollak is a labor economist at ZipRecruiter. She provides insights and analysis on current labor market trends and the future of work.

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