The state’s labor force shrank by 41,700 people in December at a time when employers were struggling to fill jobs, according to newly released government figures.
“The hope would be that that number reverses itself as the public health situation improves,” said Christopher Geehern, executive vice president of Associated Industries of Massachusetts. “We certainly need the broadest possible pool of people to fuel our growth going forward.”
The Bureau of Labor Statistics’ preliminary job estimates indicate the state gained 20,100 jobs in December.
“If you’re creating 20,100 jobs and losing 41,700 people,” Geehern said, “that’s a challenge.”
This came in a month when the state’s unemployment rate dropped by 1.3 percentage points to 3.9% – on par with the national rate – from the revised November estimate of 5.2%, the Executive Office of Labor and Workforce Development said Friday.
“The unemployment rate did indeed fall sharply. But although the number of unemployed fell by over 46,000, the number employed rose by only 7,900,” said Robert Murphy, a Boston College professor of economics. “Many of the previously unemployed look to have left the labor market. … So the drop in the unemployment rate appears to have been driven in large part by the fall in the labor force rather than a gain in jobs. This might be due to the recent surge in omicron, pulling people out of the workforce who otherwise might have continued looking for jobs and been counted as unemployed.”
Over the year, the state’s seasonally adjusted unemployment rate was down by 4.5 percentage points.
“That’s good news, especially considering Massachusetts has often been above the national rate,” said Michael Klein, professor of international economics at the Fletcher School at Tufts University.
“The big puzzle right now is why we’re losing people in the workforce,” Klein said. “People close to retirement may be deciding it’s time to retire. People may be dropping out of the labor force because it’s hard to find child care and they’re finding it’s too hard to juggle a job and children.”
The state’s labor force participation rate – the total number of residents 16 or older who worked or were unemployed and actively sought work in the last four weeks – was down seven-tenths of a percentage point at 65.4%. Compared to December 2020, the labor force participation rate is down 1.1 percentage points.
Of the over-the-month, private sector job gains the state did see last month, the largest were in leisure and hospitality; trade, transportation and utilities; and educational and health services.
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