January Employment Situation Shows Long-Term Unemployment Increases: Now Accounts for 40 Percent of All Unemployed Persons

The Bureau of Labor Statistics’ (BLS) January Employment Situation reveals a stagnant national economy, no longer on the road to recovery. The unemployment situation changed very little in January, with only 49,000 jobs recovered, leaving 10.1 million Americans still unemployed, and an unemployment rate of 6.3 percent. The Congressional Budget Office (CBO) recently projected that, without any additional stimulus, the unemployment rate will not return to pre-recession levels until 2024.i Projections from Moody’s analytics, relying on the assumption that the $1.9 trillion dollar stimulus package is passed, conclude that the economy could create almost 10 million jobs and return to full employment by late 2022, a year and a half earlier than CBO projections.ii

Local government employment remains 1 million jobs short of its February level, despite a small increase of 36,000 jobs (net). The sector gained 49,000 education jobs but lost another 13,000 non-education jobs. These small fluctuations show that local government is by no means on the road to recovery, but remains struggling nearly a year after the pandemic hit the U.S.

Long-Term Unemployment Rises Above 4 Million Workers, Now Representing 40 Percent of All Unemployment

Change in the number of long-term persons unemployed, Jan. 2020 – Jan. 2021

Perhaps most telling of the nation’s economic stalling recovery process is the ever-increasing number of workers who have been unemployed for 27 weeks and more – i.e., for over half of the year. Long-term unemployment topped 4 million this month and now represents about 40 percent of the 10 million Americans currently unemployed. January’s increase of 67,000 long-term unemployed workers is the ninth month in a row that this figure has increased, and the number is now nearly 3 million higher than it was in February – a roughly 250 percent increase.

With 4 million long-term unemployed workers currently, the nation is heading dangerously in the direction of its previous high of nearly 7 million, which it hit in 2010 in the wake of the Great Recession. From December 2009 through November 2012, long-term unemployment comprised over 40 percent of all unemployment, hitting its high of 46 percent in April 2010. With the current trajectory of long-term unemployment throughout the COVID-19 Recession, the impacts may be parallel and therefore predictive of a slow recovery process. This trend would be especially true of local government employment, which took over 11 years to recover from the Great Recession.

Long-term unemployed persons represent the greatest strain on local government resources, as counties work tirelessly to assist these residents and find them new employment opportunities, in spite of their own diminished county workforces. For example, the Senior Community Service Employment Program (SCSEP), run by the federal government, which cost about $400 million to help 60,000 unemployed persons back into the workforce in FY2015.iii The cost and strain of long-term unemployment has only increased throughout the pandemic.

More Than Half of All Job Loss in January Were Permanent

Change in temporary vs. non-temporary layoffs, Feb. 2020 – Jan. 2021

Another sign of a stagnating economic recovery, and a signal that the U.S. has a long road ahead, is the increase of 133,000 permanent job losses. Permanent job losses represent over half of all job losses and remain 2.2 million jobs higher than in February. These losses show the true long-term economic toll of the pandemic since, unlike those who are on temporary layoff, there is no quick way for these workers to reenter the workforce. On the other hand, temporary layoffs dropped to 2.7 million in January – considerably lower than its high of 18 million in April, but still 2 million workers higher than in February.

Despite Slight Overall Increase in Employment, Many Industries Lost Additional Jobs in January

Change in employment by industry, Dec. 2020 – Jan. 2021

Job losses in January were spread across industries with multiple industries cutting jobs, such as manufacturing, retail trade and transportation and warehousing.

• The leisure and hospitality sector dropped by 61,000 jobs in January. The sector continues to suffer losses following the December decline of 536,000. Nearly a third of the loss occurred in food services and drinking places (-19,000). Although the industry gained jobs between May and November, employment in leisure and hospitality is still down by 3.9 million since February.




• Professional and business services added 97,000 jobs in January. Temporary help services accounted for majority the gain (+81,000).  Notable job gains in the industry also occurred in management and technical consulting services (+16,000), computer systems design and related services (+11,000), and scientific research and development services (+10,000). Employment in the industry remains below February 2020 levels at 825,000.




• Retail trade lost 38,000 jobs in January, following a gain of 135,000 jobs in December. Job loss occurred in general merchandise stores (-38,000), electronics and appliance stores (-29,000), and non-store retailers (-15,000). Though this loss was partially offset by gains in food and beverage stores (+15,000), clothing and clothing accessories stores (+15,000) and health and personal care stores (+14,000). Employment in retail trade is down by 383,000 since February.




• Employment in transportation and warehousing dropped by 28,000 over the month and the industry is down by 164,000 jobs since February. Despite job gains in previous months, job losses occurred in various industry components including warehousing and storage (-17,000) and in couriers and messengers (-14,000).  Nonetheless, employment levels in these subsectors are higher than in February by 97,000 and 137,000, respectively.




• Despite eight months of gains, the manufacturing industry changed little in January (-10,000). Employment in durable goods decreased by 17,000 in January, while nondurable goods saw growth of 7,000 jobs. The industry’s employment remains 582,000 below February’s level despite a gain of 803,000 jobs since April.




• In January, health care employment fell by 30,000 jobs and is down by 542,000 jobs since February. Majority of the job loss in the industry occurred in nursing care facilities (-19,000). Job losses also occurred in community care facilities for the elderly (-7,000) and in-home health care services (-13,000). 




• Other major industries that experienced job gains in January include wholesale (+14,000) and mining (+9,000), while construction information, financial activities and other services changed little over the month.

Other Key Insights

Among major working groups, over the month, the unemployment rate declined for adult men (6.0 percent), adult women (6.0 percent), Whites (5.7 percent), and Hispanics (8.6 percent). In contrast, the unemployment rates changed little for other major demographic groups i.e., teenagers (14.8 percent), Blacks (9.2 percent) and Asians (6.6 percent). Throughout the current recession, workers of color have been strongly impacted negatively. The unemployment rate for black workers peaked in May at 16.8 percent and has since declined by 7.6 percentage points.

With the additional loss of 61 thousand jobs in January, the Leisure and Hospitality sector continues to be the most impacted by the pandemic, now 3.9 million jobs below February levels. This is particularly concerning because the leisure and hospitality sector primarily consists of low-wage workers, with the lowest average hourly earnings and lowest average weekly earnings of any sector.

Additionally, nearly 3 million women have left the labor force since the beginning of the pandemic, with the labor force participation rate for women over the age of 16 now 2.4 percentage points lower than February. Men over the age of sixteen has experienced their labor force participation decrease by 4.5 percentage points, or just over 2 million persons since February. Though the overall labor force participation experienced little change from December to January, it still falls about 1.9 percentage points lower than February levels as over 5 million individuals have become discouraged with job prospects and have stopped looking for work.

Read the full January employment situation analysis from the Bureau of Labor Statistics here.

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