Labor

The bummer August jobs report: from expiring unemployment $$, to Delta’s dent

Tuesday, September 7, 2021 by Snacks
_Taking the jobs report out of the oven like [Alan Thornton/The Image Bank via GettyImages]_

Taking the jobs report out of the oven like [Alan Thornton/The Image Bank via GettyImages]

Check the math again… August job numbers were as disappointing as a Fyre Festival sandwich. The US economy added only 235K jobs, the lowest gain since January — economists were expecting 720K new hires. The unemployment rate dipped to 5.2% from 5.4% in July — still higher than pre-pandemic.

  • The labor force participation rate — aka: the percentage of 16+ year olds that are working or actively looking for work — stayed at 61.7%, well below 63.3% pre-pandemic.
  • It’s not that there aren’t enough jobs. There are record high ~10M US job openings. Still, 8.4M Americans are unemployed. A few reasons why workers aren't returning...

1. Covid fears are keeping workers home as Delta surges, especially in customer-facing jobs. Leisure and hospitality jobs (think: waiters), which have been the primary driver of job growth this year, actually lost workers last month.

2. Childcare needs: Delta uncertainty has forced dozens of US school districts to postpone their return to IRL classrooms. That could slow job growth among parents — especially women, who’ve shouldered a larger share of pandemic childcare duties.

3. Boosted unemployment benefits: The extra $300/week in enhanced unemployment benefits are set to expire nationwide this week. Half of US states already cut off boosted payments earlier this summer. And they've seen about the same job growth as states that didn't. It's still too early to know how the nationwide cut-off will affect job growth.

4. Favorable labor market: Jobs are plentiful, and wages are rising faster-than-expected as companies from CVS to Walmart hike pay and benefits to attract workers. People are becoming choosier about jobs they take, which can mean sitting out longer.

THE TAKEAWAY

It's the Delta jobs report... In August, the number of people who said they couldn't work for a pandemic-related reason jumped by a whopping 400K, for a total of 5.6M. The US is seeing ~150K new Covid cases/day as the Delta variant spreads. It’s raising concerns that economic recovery could stall. The August jobs report could also cloud policy for the Fed, which is weighing when to reign in its economy-boosting policy.

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