19 C
Saturday, May 28, 2022
Home Business September 2021 Jobs Report Shows Gain of Just 194,000 as Delta Persisted

September 2021 Jobs Report Shows Gain of Just 194,000 as Delta Persisted

Job growth slowed to the year’s weakest pace last month as the latest coronavirus wave dashed hopes of an imminent return to normal for the U.S. economy.

Employers added just 194,000 jobs in September, the Labor Department said Friday, down from 366,000 in August — and far below the increase of more than one million in July, before the highly contagious Delta variant led to a spike in coronavirus cases across much of the country. Leisure and hospitality businesses, a main driver of job growth earlier this year, added fewer than 100,000 jobs for the second straight month.

“Employment is slowing when it should be picking up because we’re still on the course set by the virus,” said Diane Swonk, chief economist for the accounting firm Grant Thornton.

The economic news is not all gloomy. The unemployment rate fell sharply to 4.8 percent, and wages again rose strongly as companies outside the most Covid-affected industries snapped up available workers, and paid a premium to do so. The government revised its estimate of August job growth upward, and economists said the September figures would have looked stronger had it not been for statistical quirks in measuring public-school hiring.

But even the good news came with caveats. The unemployment rate declined in part because fewer people were in the labor force, a sign that the hiring challenges that have bedeviled employers all year won’t be quickly resolved. Rising wages could add to concerns about inflation. And the conflicting signals could complicate decisions for the Biden administration and for the Federal Reserve, which is weighing when to begin pulling back support for the economy.

It is possible that the recent slowdown is a Delta-driven blip and will soon fade — or, indeed, 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 fallen in much of the country, and more timely data from private-sector sources suggests that economic activity has begun to rebound. If those trends continue, people on the sidelines could return to the labor force, and hiring should begin to pick up.

“This report is a glance in the rearview mirror,” said Daniel Zhao, an economist at the career site Glassdoor. “There should be some optimism that there should be a reacceleration in October.”

But it is also possible that the damage done by the pandemic will take longer to heal than economists had hoped. Supply-chain disruptions have been unexpectedly persistent, and shifts in consumer behavior during the pandemic may not soon reverse. In surveys, many workers say they are reconsidering their priorities and do not want to return to their old ways of working.

Policymakers at the Fed are hoping that the Delta disruptions will prove short-lived. Fed officials have signaled that they will soon begin to pull back their support for the economy by slowing their purchase of bonds, something they could announce as soon as November. The September jobs report will probably not derail those plans, which officials have said were based on cumulative job gains and not a single month’s data. The United States has regained more than 17 million jobs since the worst depths of the pandemic.

The Biden administration, too, is focused on the longer term. In remarks at the White House on Friday, President Biden highlighted the drop in the unemployment rate and other signs of progress, while conceding he would like to see more rapid job creation in the months ahead.

“When you take a step back and look at what’s happening, we are making real progress,” Mr. Biden said. “Maybe it does not seem fast enough. I would like to see it faster, and we’re going to make it faster.”

One reason for optimism is that the Delta variant’s economic impact, while significant, has been somewhat contained. Construction companies and manufacturers reported strong job growth in September, despite supply-chain difficulties, and retail hiring rebounded after two months of declines.

The biggest drag on employment in September was in the public sector. Government payrolls shrank by 123,000 jobs, with most of the losses in education. But economists said that decline probably reflected the way the Labor Department accounts for seasonal patterns, which the pandemic disrupted. On an unadjusted basis, federal, state and local government employment actually grew by close to 900,000 workers in September. Because that’s fewer than in a typical September, the seasonal adjustment formula interprets it as a loss in jobs.

But by any measure, job growth has slowed significantly since earlier in the year. And the data released on Friday provided a stark reminder of the power the pandemic still holds over the economy, and of the long road ahead even once it is over. There are five million fewer people on U.S. payrolls than in February 2020, and 2.7 million people have been out of work for six months or more, the standard threshold for long-term unemployment. Yet job openings are at a record high, and many employers report having a hard time filling positions.

September was meant to be the month the hiring logjam began to abate. Expanded unemployment benefits, which many businesses blamed for discouraging people from looking for work, ended nationwide early last month. Schools reopened in person in much of the country, which should have made it easier for parents to return to work. Rising vaccination rates were meant to make reluctant workers feel safe enough to resume their job searches. As recently as August, many economists circled September as the month when workers would flood back into the job market.

Instead, the labor force shrank by nearly 200,000 people. The pandemic’s resurgence delayed office reopenings, disrupted the start of the school year and made some people reluctant to accept jobs requiring face-to-face interaction. At the same time, preliminary evidence suggests that the cutoff in unemployment benefits has done little to push people back to work.

“I am a little bit puzzled, to be honest,” said Aneta Markowska, chief financial economist for the investment bank Jefferies. “We all waited for September for this big flurry of hiring on the premise that unemployment benefits and school reopening would bring people back to the labor force. And it just doesn’t seem like we’re seeing that.”

Ms. Markowska said more people might begin to look for work as the Delta variant eased and as they depleted savings accumulated earlier in the pandemic. But some people have retired early or have found other ways to make ends meet and may be slow to return to the labor force, if they come back at all.

In the meantime, people available to work are enjoying a rare moment of leverage. Average earnings rose 19 cents an hour in September and are up more than $1 an hour over the last year, after a series of strong monthly gains. Pay has risen even faster in some low-wage sectors.

Many businesses are finding that higher wages alone aren’t enough to attract workers, said Becky Frankiewicz, president of the Manpower Group, a staffing firm. After years of expecting employees to work whenever they were needed — often with no set schedule and little notice — companies are finding that workers are now setting the terms.

“They get to choose when, where and in what duration they’re working,” Ms. Frankiewicz said. “That is a role reversal. That is a structural change in the workers’ economy.”

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

“There are many, many, many more businesses hiring than there used to be, so we’re competing with many other businesses that we weren’t competing with before,” said Natalie Baddorf, a baker and one of the owners.

The bakery has managed to hire a few people, including one who began this week. But other workers have given 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 hours, but cannot find enough labor to do so.

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

Jeanna Smialek and Jim Tankersley contributed reporting.


Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

Recent Comments