U.S. Economy Experiences Job Growth of 204,000 Courtesy of Small Businesses
In December 2021, the job market showed a significant surge, with overall job growth reaching 807,000 jobs, according to the latest report from the ADP National Employment Report. This increase is a marked improvement from the previous month's job increase of 505,000 jobs.
ADP Chief Economist Nela Richardson noted that this strong growth occurred as the impact from the Delta variant lessened and the Omicron variant was poised on the horizon. In her "Main Street" business blog post last week, Richardson predicted trends in interest rates and jobs for the coming year.
Service providing jobs were the primary source of growth, with an increase of 185,000 jobs. Goods producing jobs also saw a strong reading, with an increase of 8,000 very small businesses and 11,000 small businesses. Small businesses added 204,000 jobs in December, with businesses having 1-19 employees seeing an increase of 96,000 jobs and those with 20-29 employees growing by 89,000 jobs.
The fourth quarter average job growth in 2021 was 625,000 jobs, surpassing the yearly average of 514,000. However, private sector payrolls are still nearly 4 million jobs short of pre-COVID-19 levels.
The strong demand for workers has never been greater, with job openings surging to record highs. Yet, there are more job openings than there are people looking for work, leading to the question "Where are the workers?" Employers in 2022 will need to decide whether to prioritize pay equity and social infrastructure for their workers, with building equity into compensation having long-term effects. Structural support, such as affordable daycare, can empower job seekers and is now recognized as critical to the equity equation.
The exact timing, extent, and impact of the Federal Reserve's interest rate increases on small business loans, credit cards, and mortgages are unknown. The Federal Reserve is likely to raise interest rates next year, which could potentially affect the job market dynamics.
The ADP Research Institute report or press release published during that year also highlighted the importance of labour market developments in 2022, with Richardson's forecasts providing insights into the expected trends. Franchise jobs increased by 39,400 in December, compared to 35,300 the previous month. Goods producing jobs for small businesses grew by 19,000.
As we move into 2022, the job market continues to show signs of recovery, but challenges remain. The ongoing pandemic and the expected interest rate hikes by the Federal Reserve will undoubtedly impact the job market dynamics. Employers will need to navigate these challenges while focusing on creating equitable workplaces and supporting their workers in a more comprehensive manner.
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