September 2021 jobs report shows gains of just 194,000 as delta continues

Job growth slowed to its weakest pace this year last month as the latest wave of the coronavirus dashed hopes of an imminent return to normalcy for the US economy.

Only employers added 194,000 jobs in SeptemberThe Labor Department said Friday, down from 366,000 in August — and well below the more than 1 million increase in July, before the highly contagious delta variant triggered a spike in coronavirus cases across much of the country. Leisure and hospitality companies, the main driver of job growth earlier this year, added less than 100,000 jobs for the second month in a row.

“Employment is slowing when it should rebound because we are still on the path set by the virus,” said Diane Sonk, chief economist at accounting firm Grant Thornton.

The economic news is not all bleak. The unemployment rate fell sharply to 4.8 per cent, and wages rose again strongly as companies outside the industries hardest hit by Covid tapped available workers, and paid a premium to do so. The government revised up its estimate of August job growth, and economists said the September numbers would have looked stronger had it not been for statistical quirks in measuring public school employment.

But even the good news came with warnings. The unemployment rate has fallen in part because there are fewer people in the workforce, a sign that the employment challenges that have baffled employers throughout the year will not be resolved quickly. Higher wages can increase concerns about inflation. And conflicting signals could complicate the decisions of the Biden administration and for the Federal Reserve, which weighs heavily on when to start withdrawing support for the economy.

It’s possible that the recent slowdown is just a delta-driven peek and will fade soon—or, in fact, it may already be largely in the past. The data released on Friday was collected in mid-September, when the delta wave was near its peak. Since then, cases and hospitalizations have declined in most parts of the country, and more timely data from private sector sources suggest that economic activity has begun to recover. If these trends continue, people on the sidelines can return to the workforce, and employment should begin to recover.

“This report is a glimpse into the rear-view mirror,” said Daniel Chow, an economist at employment website Glassdoor. “There should be some optimism that there should be an acceleration in October.”

But it’s also possible that the damage done by the pandemic will take longer than economists had hoped. Disruptions in the supply chain have been unexpectedly ongoing, and changes in consumer behavior during the pandemic may not reverse soon. In surveys, many workers say they are reconsidering their priorities and don’t want to go back to their old ways of working.

Fed policy makers hope the delta turmoil will be short-lived. Federal Reserve officials have indicated that they will soon start withdrawing their support for the economy by slowing their bond purchases, something they could announce in November. The September jobs report likely won’t derail those plans, which officials said are based on cumulative job gains rather than one-month data. The United States has restored more than 17 million jobs since the worst depths of the pandemic.

The Biden administration is also focused on the long term. In remarks at the White House on Friday, President Biden highlighted the decline in the unemployment rate and other signs of progress, while acknowledging that he would like to see more rapid job opportunities in the coming months.

“When you take a step back and look at what’s going on, we’re making real progress,” Biden said. It may not seem fast enough. I’d like to see it faster, and we’ll work on making it faster.”

One reason for optimism is that the economic impact of the delta variable, while important, has been contained to some extent. Builders and manufacturers posted solid job growth in September, despite supply chain difficulties, and retail hiring rebounded after two months of decline.

The biggest hurdle to hiring in September was in the public sector. Government salaries have shrunk by 123,000 jobs, with the most losses in education. But economists said the decline may reflect the way the Labor Department is calculating seasonal patterns, which have been disrupted by the pandemic. On an unadjusted basis, federal, state and local government employment actually grew by nearly 900,000 workers in September. Since this is lower than in a typical September, the seasonal adjustment equation interprets it as a job loss.

But by any measure, job growth has slowed significantly since earlier in the year. Friday’s data provided a stark reminder of the power the pandemic continues to grip the economy, and the long road ahead even after it ends. There are five million fewer people on the US payroll than in February 2020, and 2.7 million people have been out of work for six months or more, which is the record for long-term unemployment. However, job prospects are at a record level, and many employers report that they are having a hard time filling jobs.

September was supposed to be the month when the employment crisis began to subside. Extended unemployment benefits, which many companies blamed for discouraging people from looking for work, expired nationwide early last month. Schools have reopened in person in most parts of the country, which would have made it easier for parents to get back to work. The goal of the high vaccination rates was to make reluctant workers feel safe enough to resume their job search. As recently as August, many economists have been spinning around September as the month when workers will return to the labor market.

Instead, the workforce has shrunk by about 200,000 people. The renewed pandemic has delayed the reopening of offices, disrupted the start of the school year and made some people reluctant to accept jobs that require face-to-face interaction. At the same time, preliminary evidence indicates that Cut unemployment benefits It didn’t do much to get people back to work.

“I’m a little baffled, to be honest,” said Anita Markowska, chief financial economist at investment bank Jefferies. “We have all waited for September this big wave of hiring on the grounds that unemployment benefits and reopening of schools will get people back into the work force. And we don’t seem to be seeing that.”

Ms Markowska said more people may start looking for work as the delta variable eases, depleting the savings accumulated earlier in the pandemic. But some people retire early or find other ways to make ends meet and may be slow to return to the workforce, if at all.

In the meantime, people who are available to work are enjoying a rare moment of influence. Average earnings were up 19 cents an hour in September and were up more than $1 an hour from a year ago, after a streak of strong monthly gains. Wages have risen faster in some lower-wage sectors.

Becky Frankievic, president of Workforce Group, a recruitment firm, said many companies are finding that higher wages alone are not enough to attract workers. After years of expecting employees to work when they are needed—often without a fixed schedule and without warning—companies are finding that workers are now setting the conditions.

“They have to choose when, where and for how long to work,” Ms. Frankievic said. “This is a role reversal. This is a structural change in the workers’ economy.”

Arizmendi Bakery, a cooperative in San Rafael, California, recently raised its wages by $3 an hour, the largest increase in its history by far. But it’s still struggling to attract applicants heading into the crucial holiday season.

“There are many, many, many companies that are hiring more than they used to be, so we are competing with many others that we have not competed with before,” said Natalie Baddorf, a baker and one of the owners.

The bakery has managed to hire quite a few people, including one who started this week. But other workers gave their notice to leave. The bakery, which has been operating on reduced hours since the pandemic began, now has enough business to return to its original opening hours, but is not finding enough labor to do so.

“We are talking about cloning ourselves,” Ms. Baddorf said.

Jenna Smyalek And Jim Tankersley Contribute to the preparation of reports.

Write a Comment

Your email address will not be published. Required fields are marked *