Blowout employment report doesn’t jibe with recent tech layoffs, but
overall labor picture is a lot more buoyant
By Justin Lahart
As interest rates rise and companies tighten their belts, white-collar workers have taken the brunt
of layoffs and job cuts, breaking with the usual pattern leading into a downturn. WSJ explains why
many professionals are getting the pink slip first.
Economists keep saying that the labor market will start to really cool off any second now. But not
this second.
The Labor Department’s jobs report on Friday was in all respects a blowout. The U.S. economy added
a seasonally adjusted 517,000 jobs in January from a month earlier, marking the biggest gain since
July and far more than the 187,000 economists polled by The Wall Street Journal expected. The
unemployment dropped to 3.4% from December’s 3.5%, hitting a level last seen in 1969.
The report also included annual revisions that lifted the Labor Department’s overall job
count, as well as its population and labor force estimates.
The data is obviously hard to square with all the big company layoffs that have been making
headlines, but it is in keeping with a lot of other data that has been coming out lately. On
Wednesday, the Labor Department reported that the number of unfilled job openings at the close of
December rose to a seasonally adjusted 11 million from
November’s already high 10.4 million, for example. And on Thursday it reported that initial jobless
claims filed last week remained extremely low.
Perhaps it is just a matter of time. People don’t always get shown to the door immediately after
layoff announcements, and they don’t always sign up right away for jobless claims, if they do at
all. But it is also the case that the big companies laying people off account for just a tiny
sliver of U.S. employment. Meanwhile, there are plenty of places where workers are needed. Think of
the nursing shortages that are still affecting hospitals, for example. Or look at the “other
services” category—which includes car mechanics, hairdressers and the like—where employment is
still below prepandemic levels.
Still, employment gains like January’s hardly seem sustainable. The Federal Reserve is obviously
pleased—though somewhat reluctant to admit—with how inflation has been cooling lately, but Friday’s
report would add to worries that wage growth could reaccelerate, making inflation less tractable.
With hope, worries about the job market overheating will prove overblown. There was
some good news on that count in Friday’s report. First, it showed that wage growth in

January continued to slow, with average hourly earnings up 4.4% from a year earlier—the
smallest annual gain since August 2021.
Second, the annual revisions included in Friday’s report suggest the economy has more capacity to
add workers. December’s count of the noninstitutionalized population aged 16 and higher was revised
up by 954,000, and the labor force—people who are either working or looking for work—was revised up
by 871,000. Last January the Labor Department revised up its December 2022 population estimate by
973,000 and its labor force estimate by about 1.5 million.
These upward revisions are likely largely the result of increases in immigration, which plummeted
in the first year of the pandemic and then came back—the Census Bureau in December reported that
net immigration to the U.S. rebounded over the 12 months ended July 1, 2022, to the highest level
since 2017. One thing the population gains might mean is that employment can grow more quickly
without exhausting the supply of available workers.
That doesn’t mean the economy can keep adding a half million new jobs a month, though.