ON THE SEPTEMBER JOBS REPORT
Labor supply factors and the coronavirus continue to weigh on the labor market. This morning the Bureau of Labor Statistics reported that the United States economy added just 194,000 jobs in September, which was a slowing from the revised 366,000 in August, and less than a quarter of the increase in July. The unemployment rate also fell sharply to 4.8%, down from the 5.2% level last month.
Since at least the spring of this year, it became clear that while there was strong demand for workers, employers were having difficulty finding workers to hire. Every month since February has set a new record high for the job openings rate, hitting 6.9% in July, up 2 percentage points from the already-tight pre-pandemic labor market of late 2019. In the hardest-hit leisure and hospitality sector, job openings reached an off-the-charts 10.7% rate. At the same time, unemployment had fallen only slightly over the last few months, and the rate of hiring slowed. In the most recent data, there were 1.3 job openings for every unemployed worker. The hiring difficulties seem to have continued now into the fall.
There was hope that the lessening of supply side factors in September would give a boost to labor markets, with the expiration of the enhanced federal unemployment insurance programs bringing more people back into the workforce and the return to in-person schooling lessening childcare needs. The household survey does show signs of this impact, with 526,000 more workers employed and 710,000 fewer unemployed this month, which underlies the drop in the unemployment rate. However, business payrolls are not yet showing this impact. The hardest-hit leisure and hospitality sector only added 74,000 jobs, less than a quarter of the pace of hiring over the summer.
Noah Williams is an adjunct fellow at the Manhattan Institute and the Juli Plant Grainger Professor of Economics and director of the Center for Research on the Wisconsin Economy at the University of Wisconsin–Madison.
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