January jobs report: Hiring growth remains solid, despite government shutdown

Millennials working on a computer.

January proved a rocky month for many Americans, due to a partial government shutdown that left roughly 800,000 federal workers furloughed or working without pay.

According to the Congressional Budget Office, the 35-day shutdown cost the economy $11 billion, with an estimated $3 billion permanently lost. But despite this uncertain start to a new year, the latest jobs report from the Bureau of Labor Statistics shows hiring growth remained solid throughout the month.

In January, 304,000 jobs were added to the economy, marking a historic milestone of 100 straight months of job gains. Unemployment rose from 3.9 percent to 4 percent because a small percentage of furloughed employees who could not work were counted as unemployed, says the report. Wages also increased by 3.2 percent from a year ago, showing that employers are willing to not only hire more, but also pay more in today's tight labor market.

CNBC Make It spoke with senior economic analyst Mark Hamrick, Indeed research director Martha Gimbel and Glassdoor chief economist Andrew Chamberlain about the temporary impact of the shutdown and why today's market still favors job-seekers.

Protesters hold signs during a protest rally by government workers and concerned citizens against the government shutdown on Friday, January 11, 2019 at Post Office Square near the Federal building, headquarters for the EPA and IRS in Boston.
Joseph Prezioso | AFP | Getty Images

Impact of the shutdown

While the longest government shutdown in history certainly put a damper on the activity of many employees and businesses, Hamrick says he likens its impact to that of a hurricane "where economic activity is either delayed or destroyed," but eventually, "things get restored."

"These things tend to be temporary," he tells CNBC Make It, "although the impact on individuals who missed paychecks and didn't have savings can be significant."

According to the BLS, federal employees working without pay were still considered employed, which is why Gimbel says she's not surprised that the jobs report remained positive. However, Gimbel says data from Indeed demonstrates an uptick in federal workers looking for new opportunities, including part-time work, to make ends meet.

"Federal workers tend to love their jobs and have low quit rates," she says. "But there are now more people wondering if the federal government is for them, and now they are going out in a tight labor market looking for jobs."

Gimbel adds that "this can be bad news for federal agencies who are looking to replace them in a tight market and says that while January's jobs report does provide a little bit of comfort, it "should not distract from a very real hurt that many workers suffered during the shutdown."

"It may take a while to really see what effects from the shutdown occurred, and we will need a couple more months of data," she says.

Tim Boyle | Getty Images

Take advantage of seasonal hiring

In an interview with CNBC Make It last month, Hamrick and Chamberlain advised job-seekers to take advantage of the year's first quarter hiring spree, since now is the time when hiring managers have fresh budgets.

Hamrick says January's numbers are a reflection of this hiring spree, especially with many companies adding seasonal positions. "Even during the course of an economic shutdown, there is always going to be seasonal hiring," he says. "On the seasonal front, we heard that Lowe's will be hiring thousands of seasonal workers as well as permanent jobs and managers."

When looking at the overall numbers from the jobs report, it's clear that many industries are in the midst of strong hiring growth, with the leisure and hospitality industry adding 74,000 jobs last month, the construction industry adding 52,000 and the healthcare industry adding 45,000.

"For most, it is a great time to look for work, particularly for those who have in-demand skills and work in locations where the regional economies are robust," says Hamrick.

According to Glassdoor's latest Local Pay Reports, San Francisco, Los Angeles, New York City and Philadelphia demonstrated the strongest wage growth for the month.

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10 years ago this month

Despite today's concerns around the government shutdown, data shows that Americans were still far more worried about the state of employment and the economy 10 years ago.

In January 2009, employers cut 598,000 jobs, putting unemployment at 7.6 percent. According to CNNMoney, the report was the worst jobs report since December 1974.

"Hiring is falling off dramatically and layoffs are accelerating," Sung Won Sohn, economics professor at Cal State University-Channel Islands told CNNMoney at the time. "The layoffs have become an almost popular thing to do for corporations. Many businesses are scared. They want to take precautionary steps."

Unlike the most recent report, which showed strong job gains in industries like hospitality and construction, the report from January 2009 showed that construction shed 111,000 jobs while hospitality lost 28,000.

"Despite the uncertainty heading into today about how the recent federal government shutdown may impact the economy," said Chamberlain in a statement, "today's jobs report shows the nation's labor market overall remained healthy in January, and employers are likely to continue today's steady pace of hiring throughout the first half of 2019."

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