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More than 300,000 jobs lost in January thanks to Omicron, ADP says

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JLGutierrez via Getty Images

Although President Joe Biden promised to shut down the coronavirus, it seems the virus is shutting down job growth, as disappointing numbers reported Wednesday reveal.

Private-sector employment decreased by 301,000 jobs from December to January, according to a report from the payroll processing firm ADP. It's an unexpected blow for the Biden economy after Dow Jones estimated jobs would grow by 200,000 in January, following a revised 776,000 jobs gained in December. It was the first month of negative job growth reported since December 2020.

ADP's chief economist attributed the job losses to the spread of the Omicron variant of coronavirus.

"The labor market recovery took a step back at the start of 2022 due to the effect of the Omicron variant and its significant, though likely temporary, impact to job growth," Nela Richardson, chief economist for ADP, said. "The majority of industry sectors experienced job loss, marking the most recent decline since December 2020. Leisure and hospitality saw the largest setback after substantial gains in fourth quarter 2021, while small businesses were hit hardest by losses, erasing most of the job gains made in December 2021."

More than half of the job losses happened in the leisure and hospitality industries, where companies reported a loss of 154,000 jobs. Trade, transportation, and utilities firms reported 62,000 jobs lost, while health care and social assistance categories lost 10,000.

There were 21,000 manufacturing jobs lost, and 10,000 construction jobs are gone.

In total, industries that provide services lost 274,000 jobs, while jobs in industries that produce goods fell by 27,000.

Small businesses were hit hardest. Firms with fewer than 50 employees were responsible for 144,000 jobs lost, with 106,000 of those jobs coming from businesses with fewer than 20 employees.

Medium-sized businesses with between 50 and 499 employees lost 59,000 jobs. Large businesses with more than 500 employees lost 98,000.

Later this week, the U.S. Labor Department will release its January jobs report, a more closely watched jobs figure that is expected to show the economy added 150,000 jobs last month. Even if the government reports jobs growth close to that estimate, it's a substantial decrease from the number of jobs gained in December.

White House press secretary Jen Psaki told reporters on Tuesday to expect a negative number.

"Because Omicron was so highly transmissible, nearly 9 million people called out sick in early January when the jobs data was being collected," Psaki said. "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."

Hourly employees who called in sick with COVID-19 and stayed home without paid leave are not counted as employed, even though they have not been laid off. The Labor Department's jobs survey took place between Jan. 9 and 15, during a peak of COVID-19 cases.

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