Washington, Oct. 10 (BUS) – US employers added just 194,000 jobs in September, a second tepid gain in a row and evidence that the pandemic has kept its grip on the economy, as many companies struggle to fill millions of open jobs.
Friday’s report from the Labor Department also showed that the unemployment rate fell last month from 5.2% to 4.8%. The rate fell in part because more people found jobs but also because fewer people looked for work by about 180,000 in September, meaning they were not counted as unemployed.
September’s sluggish job gains slipped to the modest 336,000 the economy added in August and were the lowest since December, when employers actually cut jobs, the Associated Press (AP) reported.
The economy is showing some signs of exiting the Delta variant of the coronavirus, with new confirmed COVID-19 infections declining, restaurant traffic rebounding slightly and consumers willing to spend. But new infections remained high at the start of September. And employers are still struggling to find workers because many people who have lost their jobs due to the pandemic have yet to start looking again. The continuation of this trend, with jobs at a record level, has confused many economists.
Most were expecting in September to deliver solid job growth as schools reopen, thus freeing fathers, especially working mothers, from returning to their jobs. Many of the improved unemployment benefits programs expired on September 6, potentially providing incentives for more people to look for work. At least before Delta ramped up, many companies planned to return to office work, which would have revitalized the still-dormant city centres.
Instead, as a result of the delta variant, many office buildings remained vacant and fears of illness rebounded. A Census Bureau survey found that the number of people not working because they had COVID or were caring for someone with the disease doubled between July and early September. The coronavirus outbreak has also led to some schools being temporarily closed, making it difficult for many mothers to hold permanent jobs.
At the same time, many economists say that as COVID recedes more and Americans resume traveling, eating out and watching movies, more people will likely return to the workforce, and employment will boost.
“This report is a look in the rearview mirror, and hopefully this means that the worst is behind us, and that the worst was just a slowdown in the recovery,” said Daniel Chow, chief economist at jobs website Glassdoor.
For now, people like Sarah Noemeyer have chosen to stay on the sidelines. Neumeyer, 32, of Natick, Massachusetts, who has 3-year-old twin sons, said she’ll wait until winter break to look for work again.
She had turned down a job as the pandemic intensified in March 2020 because, out of concern for their health, she did not want to put her children in foster care. These concerns have not been raised.
“I was waiting for the vaccine,” she said. “My boys were premature, and we did everything to keep them healthy. I don’t want to risk that now.”
The delta variant has discouraged Neumeyer in another way: her hands-on experience in event planning, an area devastated by the pandemic and unlikely to recover until the delta variant fades further.
Neumeer has a lot of companies. A report on Friday said the proportion of Americans who had a job or were looking for a job — known as labor force participation — fell in September from 61.7% to 61.6%, well below the pre-pandemic level of 63.3%.
The decline in labor force participation occurred entirely among women, indicating that many working mothers still cared for children at home. For men, work participation has not changed. Some after-school programs were not in place last month to provide all-day care. Childcare is becoming scarcer and, in many cases, more expensive.
Fed Governor Lyle Brainard noted in a recent speech that the coronavirus outbreak in late September caused 2,000 school closures for an average of six days in 39 states.
John Lay, CEO of Mister Car Wash, which has about 350 locations, said he aims to hire 500 people in the next three months to add to the company’s 6,000 workers. Mister Car Wash, based in Tucson, Arizona, has raised a worker’s average hourly wage to $14.50 an hour since the pandemic began, and offers health and retirement benefits. Yet it struggles to attract applicants.
“It is definitely the most challenging job market I have ever faced in my 20 years in the business,” Lay said.
He said some of his employees have had to resign to take care of the children. And despite the end of the supplemental federal unemployment assistance, Lai is not seeing a slight increase in the number of job applicants.
“I think it’s the biggest puzzle of the economy,” he said. “People who sit on the sidelines – why are they sitting on the sidelines?”
He suspects that one factor is the constant fear of getting sick at work.
The boosted unemployment aid that expired in early September included a $300-a-week federal supplement, as well as programs that first covered temporary job workers and people who have been unemployed for six months or more. The end of these programs has cut off aid to about 7 million people.
Many business owners and Republican political leaders have argued that the additional $300 per week benefit dissuades some people from looking for jobs because they can receive more money from unemployment assistance. But so far, ending those programs appears to have had little effect on the number of people looking for work.
Economists still believe that most of the 3 million people who have lost their jobs and stopped looking for work since the outbreak of the pandemic will resume their search as COVID wanes. They noted that it took years after the 2008-2009 recession, for the proportion of people working or seeking work to return to pre-recession levels.
Lydia Bosor, an economist at Oxford Economics, said September’s meager gains would likely still be enough for the Federal Reserve to press ahead with its plans to roll back its extraordinary aid to the economy. The Fed is expected to announce in November that it will start slowing its bond purchases, which are aimed at lowering long-term loan rates and encouraging more borrowing and spending.
Tammy Browning, president of KellyOCG, an employment agency, said she doesn’t notice much urgency among some potential job seekers. She said some families have learned to live on lower incomes, adjusting to one income with mothers staying at home. Household savings remain, on average, above pre-pandemic levels, thanks in part to the stimulus checks.
“I think it will take several months before people are back in full force,” Browning said.
One factor behind the employment weakness last month was the sharp drop in local government education jobs. The number of such jobs fell by 144,000 last month despite the reopening of schools. This decline indicates that many local school systems have not employed as many people as they normally would. Many had difficulty finding enough bus drivers, cafeteria workers and other support staff.
Most industries added jobs last month, albeit at a low pace. Transportation and warehousing, for example, boosted by the surge in online shopping, added 47,000 jobs. Manufacturers added 26,000. Despite this, restaurants, hotels, and parks only gained 74,000 positions, more than in August but much lower than their summer pace, when they were adding hundreds of thousands of workers per month.
Another reason for the scarcity of workers is the increasing numbers of retirees among the elderly and the wealthiest, whose shares in their homes and portfolios have risen since the outbreak of the pandemic and who have been able to build savings. Goldman Sachs estimates that about 1.5 million people retired before the pandemic upended the economy. Economists expect many of these people to remain retired.
RAE