The Biden administration is laying the groundwork for disappointing job growth in January, warning that an omicron-fueled surge in COVID-19 cases earlier this month likely distorted hiring as the virus sidelined millions of workers.
White House press secretary Jen Psaki told reporters on Monday that because the Labor Department report only includes data from the first half of a month, it could have a disproportionate impact on the headline jobs figure – including the possibility of negative growth. The economy has not shed jobs since December 2020, when employers cut 306,000 jobs before the vaccine was available.
“Because omicron was so highly transmissible, nearly 9 million people called out sick in early January when the jobs data was being collected,” Psaki told reporters. “The week the survey was taken was at the height of the omicron spike… As a result, the jobs report may show job losses, in large part because workers were out sick from omicron at a point when it was peaking.”
The “survey reference week” this month was taken between Jan. 9 to Jan. 15 – precisely when COVID-19 cases peaked, with the highest seven-day average count coming on Jan. 15, according to the CDC. Hourly employees who were sick and had to stay home that week without paid sick leave will not be counted as employed, even if they have not been laid off.
A Census Survey shows that an estimated 8.75 million Americans said they were not working in early January, either because they were infected with COVID-19 or taking care of someone else who had contracted the virus. That’s a huge jump from December, when 2.96 million people reported they could not work due to the coronavirus.
Economists surveyed by Refinitiv expect the U.S. economy to have added 153,000 jobs in January, which would still be the weakest since December 2020. But there is a possibility the number will be far worse.
“If you think about omicron in early January, and the impact it was having in terms of the number of people who were out sick, we do expect there to be some real variation in the data,” National Economic Council Director Brian Deese told CNBC on Sunday.
For weeks, there has been growing unease on Capitol Hill over a stunning rise in cases driven by the highly transmissible omicron variant.
While it’s still unclear what the fast-spreading variant will ultimately mean for the health of the economy, its effects on daily life have already been felt. Thousands of flights have been canceled, Broadway shows are shuttering their doors and a growing number of schools have postponed reopenings. The White House has maintained that it has the resources needed to respond to any disruptions caused by the omicron spread.