Thread by @DianeSwonk

Watching this week closely as it is the week that the January employment survey will be taken for Jan. Slowdown could be significant. Risk of a large drop in payrolls. Spread & contagion of Omicron mimicking mandated lockdowns in way that no other variant did.

Important to understand what the employment situation measures. The establishment survey is an estimate of those on a payroll during the week. Even those paid only an hour during the week will show up on payrolls. Pandemic has complicated measures & made for lg revisions.

The first estimates on new business creation and small business employment can be really off. In Mar 2020 , which covered mid Feb to mid Mar & was taken before one lockdown occurred showed a staggering 701k initial loss in jobs.

After revisions, that number ballooned to 1.7M as dinning out, congregating at conferences and showing up at doctors and dental offices plummeted. First ever service-sector driven recession. Health care emp, once seen as recession proof, fell at onset of health crisis.

Payroll report also measures hours worked and average hourly earnings. Hours worked will fall as disruptions due to Omicron mount. Not clear what happens to earnings as lowest wage workers will be hit hardest and drop out of mix temporarily.

The latter actually skewed the mix of wages higher during onset of pandemic in March & April 2020 and pushed up dramatically overall measures of wages. Need to watch for this effect repeated in Jan 2022; possible in Feb 2022.

Silver lining is how rapidly Omicron recedes.

In Jan 2022, we have aversion to in-person activities colliding with acute labor shortages due to the sheer number out ill. The latter is mimicking mandated lockdowns in some parts of economy. Hard to imagine a sector that will not be affected. Logistical nightmare.

Many online and transportation companies will keep seasonal hires to compensate for those out ill. This will blunt losses in retail & warehousing & transportation. Problem for larger transportation and mfgs sectors is low vaccination rate among truck drivers.

That makes them particularly susceptible to long-term illness and threat of hospitalization. This will exacerbate the shortage of truck drivers & add to logistical nightmares across the economy. Also adds to loss in pay w/o offsetting aid.

Schools & government offices also closing, which have knock off effects on parents. Hospitals are overwhelmed by sheer number of those infected and surge in ERs same time burnout and staffing shortages already acute. Blow more broad based on paychecks.

Separately, household survey could show loss in participation due to illness & surge in school closings - recruiting could also slow as firms deal with own labor shortages due to #s out sick. This could dampen upward pressure on overall unemployment rate during the month.

Notable that those forced to work part time plummeted in December but those working multiple jobs rose. The ranks of those workroom part time for economic reasons soured in March & April 2020. The wrinkle could be the sheer number out sick. Multiple job holder will ⬇️

The sheer number of those out of work due to illness also likely to skyrocket.

@juliaonjobs has done some estimates on this, which have the number going up more than three fold. That could be conservative given how many are sick but not showing up in official COVID case counts

The push by CDC and other gov’ts in Europe to limit quarantines is an acknowledgement of how disruptive Omicron wave could be to livelihoods and functioning of broader economy. Lack of coordination of quarantines across borders.

Silver lining is Omicron seems to recede rapidly

Moral of Story: Omicron could be much more disruptive to both demand and supply than we saw during Delta waves. Synchronicity of disruptions amplify but could also open door to bigger bounce back. Small conciliation. Long COVID likely to rise, w deeper scars to all economies.

Science of vaccines and treatments better - upping ante we make it to an endemic instead of a pandemic. Hope springs eternal.