Bad Times Ahead? The August Jobs Report

On September 14, just as we were readying this piece for publication, the Census Bureau issued a report showing that while the pandemic elevated the poverty rate, COVID-related stimulus measures had abated that effect, lifting 11 million families out of poverty. Stay tuned for commentary from Dr. Stricker and others about what all that means. But the analysis below tells us there is so much more to be done. (Ed.)

The Bureau of Labor Statistics (BLS) reported that the unemployment rate fell by 0.2% to 5.2% in August. Labor markets seem to be moving in the right direction. But there is a long way to go to reach full employment, which, as defined by many mainstream economists, is 4% unemployment or less. And it is much, much farther to get to real full employment. While official figures show that we have 8.4 million unemployed people, the National Jobs for All Network’s Full Count finds that we have 18.6 million people who need and want jobs or upgrades from part-time to full-time jobs.

Even if job growth stays positive, we need special programs and policies to make sure that some social groups aren’t left behind. The Asian-American unemployment rate is about the same as the white rate (4.6% vs. 4.5%), but the Latino rate is 6.4% and the Black rate actually rose a bit to 8.8%. The Black teen unemployment rate jumped 4.6 points to 17.9%. 

In general, those with low educational attainment deserve special attention. Job levels for those with less than a high school diploma are 7.5% below pre-pandemic levels; for those with a B.A., job levels are 0.5% above pre-pandemic levels. How about real training programs linked to real jobs for those with less education? I may be dreaming.

Toxic Workplaces

The BLS’s survey of non-farm jobs at business and government organizations showed that just 235,000 jobs were added in August. Each of the previous two months added a million jobs. Quite a decline. One of President Biden’s economists, Jared Bernstein, warned us not to focus on a single month, and that is a good general rule.

But Biden and others have correctly linked the slowdown to a huge health-and-politics problem that is not going away soon: the spread of the Delta variant and the refusal of right-wing governors and legislators to push people to get vaccinations and wear masks. Shots and masks help keep businesses and other institutions open–which is what these governors say they want. But hospitals are being overwhelmed in areas where the variant is in control and workers’ anxieties about toxic workplaces have been fired up again. Even professors are not immune to anxiety or disease. Several have quit rather than work in classrooms full of unmasked students.

Some people have stopped going out to eat. Open Table reservations are down a bit. Some owners are complaining about labor shortages, and others may be dialing back hiring plans. These facts could explain why employment in bars and restaurants fell by 42,000 in August. And that happened despite rising pay levels. For the whole Leisure and Hospitality sector, hourly wages rose 13% over the year. (Less after inflation, but still, a substantial increase.)  

The Big Rethink Continues

COVID-19 and its Delta variant are not the only reasons people are reluctant to return to work. Sometimes the jobs just aren’t there; many of us believe that the truly unemployed vastly outnumber job openings. But there is a mix of other factors, too. Some people cannot find child care. Also, in many sectors, including restaurants and bars, the jobs can be : supervisors can be mean, customers rude, and benefits  low to non-existent. And although pay rates are rising in some areas, they are still very low on average, and the lowest are in Leisure and Hospitality. To the list of negatives add another related big one: many employees surveyed by the management consulting firm McKinsey & Co., say they do not feel valued by their bosses and their organizations. No surprise there.

If you are like many unemployed people right now and have a little time to reflect, you may be thinking hard about your career future. Do you really want to work in the same sector you worked in before? Will you be able to find a job that will give you half-way decent material rewards and also make you happy or a little less unhappy about going to work every day?

Unemployment benefits have helped people financially. However,  whether one lived in a state that kept the $300 supplement or eliminated it early does not seem to have made much difference in job growth, which was about the same regardless of benefits. The conclusion that the $300 and the earlier $600 supplements were not central factors in people’s decisions about whether to return to work seems to be widely accepted except by many state-level Republican leaders.

Soon we will know more about the effects of government income-supports. Over the Labor Day weekend, job-related pandemic benefits ended. The $300 supplement, the 86 weeks of benefits for those normally not eligible for unemployment compensation such as gig workers, and the federal addition of 53 weeks to the normal 26 weeks of state unemployment benefits–these are gone. (If you forgot to file for events that occurred before September 4, you may still be able to do that.) 

More Poverty

What will be the impact of this severe reduction of benefits on household welfare and on the state of the economy? Will many people have to take lousy jobs? Will some folks try to get by on savings and a combination of other government benefits, such as expanded food stamps, the increased Child Tax Credit, and unspent federal funds for rental assistance? Whatever happens, millions of people now above poverty lines will fall below them. And the economic recovery will slow.