U.S. reports slight decrease in unemployment in January 2021

By Jurie Hendrik Human

The U.S. economy appears to gradually be recovering as the country has taken action to adjust to the “new normal”. After unemployment skyrocketed from just under 3.5% to nearly 15% between January and April 2020, the January, report from the U.S. Bureau of Labor Statistics provides evidence of the improvement trend recorded in the second half of 2020 the unemployment rate had decreased by 0.4% by December 2020 to reach 6.3%.

Unemployment rate

In January 2021, the total U.S. labor force was estimated to stand at 160 million with a participation rate of 61.4%. Overall, the employment to population ratio in the U.S. is 57.5%. Roughly 100 million of the U.S. population are not considered part of the workforce.

• Unemployment in the U.S. stood at roughly 6.3% in January 2021. This is up just over 2% from its low point of 3.5% in January 2020 but down by 0.4% from 6.7% in December 2020.
• In real numbers, this means 143 million individuals are currently employed in the U.S. (nonfarm payroll employment). This is up from a low point of 130 million in April 2020. However, employment is still down 10.1 million from its highpoint of 153 million in January 2020.
• The biggest reasons for unemployment, in descending order, are job losers (7 million), re-entrants (2 million), job leavers (653,000), and new entrants (542,000).
• The majority of individuals have been unemployed for over 27 weeks (6 million). Those who remained unemployed for less than five weeks numbered roughly 3 million.

Unemployment by sector

Unemployment increased almost across the board for all industries. According to the U.S. Bureau of Labor Statistics:

• “Leisure and hospitality” was one of the hardest-hit industries, with unemployment standing at 15.9% in January 2021 (+10%).
• “Mining, quarrying, and oil and gas extraction” had the biggest percentage drop with unemployment rising from 1.9% in January 2020 to 14.2% in January 2021 (+12.3).
• “Agriculture and related private wage and salary workers” witnessed a 9.4% unemployment rate. However, this group actually saw unemployment decrease from 12.5% in January 2020 (-3.1).
• “Nonagricultural private wage and salary workers” saw unemployment rising from 3.8% to 7.1% (+3.3%).
• “Self-employed workers, unincorporated, and unpaid family workers” also took a significant blow with an increased unemployment rate of 6.2% in January 2021 (+2.6%).
• Government workers had the lowest unemployment rate of 3% in January 2021, although this is up from 2.1% in January 2020 (+0.9%).

Unemployment in the U.S. demographics

The large-scale job losses during the first half of 2020 as a result of the COVID-19 pandemic were mostly indiscriminate. During the recovery, the distribution of unemployment still followed familiar demographic patterns in terms of the race with no major reshuffles.

Unemployment by sex

• Overall, the unemployment rate was the same for both adult men and women (over the age of 20) at 6% during January 2021.
• For men, this is up from 3.1%, and for women, up from 3.2% during January 2020.

Unemployment by race

• The overall unemployment rate remained the lowest for White individuals at 5.7% – up from 3% in January 2020 (+2.7%).
• Black or African or African Americans had the highest rate of unemployment at 9.2% in January 2021 – up from 6.1% in January 2020 (+3.1).
• Asians saw their rate of unemployment increase by the second-largest margin. In January 2021, it stood at 6.6% which is up 3.5% from its 3.1% low in January 2020.
• Hispanics or Latinos faced the largest increase in their collective unemployment rates by 4.3%. Unemployment stood at 8.6%, which means it doubled from 4.3% in January 2021.

Unemployment by age

• By age group, teenagers (between 16 to 19 years of age) had an unemployment rate of 14.8% in January 2021. This is up 2.2% from 12.6% in January 2020. Unemployment was at its highest for this age group in December, standing at 16%.
• Individuals above the age of 25 had the lowest unemployment rate at 5.7% in January 2020. However, this is still almost double the figure in January 2020 which was 2.9%.

By level of education

Clearly, higher levels of education are still correlated with lower unemployment rates. The unemployment rates for individuals with various levels of education (above the age of 25 years) are as follows: