Today’s September jobs report from the Bureau of Labor Statistics is the last before the election. Despite having COVID-19, Donald Trump and his cohort of sycophants will no doubt make a big deal of this tally of jobs the economy added in September. Or rather the first two weeks of September and last two of August. That’s the period when the population and business establishment surveys were conducted to provide data used in the report. A gain of 661,000 jobs is nothing to sneeze at even though it’s less than half the gains made in August. In normal times, it would be a stunning achievement.
It fails on that score because that gain still leaves at least 10 million people out of work who had a job in the Before Times of February when the economy had not yet been partially shuttered to fight the coronavirus. “At least” because not only is that number an undercount of how bad the situation truly is, the new 7.9% official unemployment rate—which counts anybody who worked for even one hour during the survey period as employed—paints a rosier than reality picture, too, since 695,000 left the labor force. The way the rate is calculated, always a bit definitionally problematic, is especially so during a fluid economic crisis. An alternative measure the BLS calls U6 measures both unemployment and underemployment, including discouraged workers and anyone who has looked for work in the past 12 months. U6 fell in September to 12.8% from 14.2% in August.
Said finance and economics professor Sung Won Sohn at Loyola Marymount University in Los Angeles: “The recovery continues but at slower rate in part because the government stimulus has diminished significantly. We are seeing more layoffs and bankruptcies, and until the next government comes in with more support, I would not be surprised to see a renewed decline in employment toward the end of the year.”
“It’s disturbing that we’re seeing such a dramatic slowdown in employment gains as we head into the fall,” said Diane Swonk, chief economist for the accounting firm Grant Thornton. “This is a red flag. We need aid now.”
Homebase, an employee scheduling company, issues monthly reports about what it sees based on company work schedules. Here is the latest:
For the third continuous month since June, our Main Street economic indicators remained flat, with 20% of businesses still closed nationwide.
But for the first time since the onset of the pandemic, we saw our employment metrics fall, ending the 6-month period of upward trajectory and signaling worsening conditions ahead for the small business economy.
SOME ECONOMIC DATA FROM OTHER SOURCES
I’ll return to a few more details momentarily. But first a look at some economic data from other measures to put a bit of context around today’s report.
About 3.8 million jobs lost to the Pandemic Recession are permanently gone. Workers who had them can’t just wait things out until they’re called back to their old jobs because they never will be.
Consumers kept spending last month, increasing their purchases by 1% over July, but household income fell 2.7% in August because of the expiration of the $600-a-week extra going to workers collecting unemployment benefits. Even so, household income was still 2% higher than in February.
Economists are estimating the gross domestic product in third quarter may have risen by 30%. It fell 31% in the second quarter and 5% in the first.
U.S. manufacturing grew in September, continuing the expansion it began four months ago. But in August it was still 7.3% below where it was in February. And the manufacturing workforce is still shrinking, with about 700,000 workers fewer than the 12.1 million in February.
Companies this week, including Disney, American Airlines, United Airlines, Shell, and Allstate, have announced layoffs of more than 60,000 are on the way.
Tony Romm at The Washington Post reports:
The worst economic crisis in more than a generation has thrust potentially millions of Americans across the country into a similar, sudden peril: Cash-strapped, and in some cases still unemployed, they have fallen far behind on their electricity, water and gas bills, staring down the prospect of potential utility shut-offs and fast-growing debts they may never be able to repay. […]
At the start of the coronavirus pandemic, many states acted quickly to ensure their residents would not lose their power or other utilities if their jobs or wages were slashed. Now, however, only 21 states and the District of Columbia still have such disconnection bans in place. That leaves roughly 179 million Americans at risk of losing service even as the economy continues sputtering, according to the National Energy Assistance Directors’ Association, which is tracking the moratoria.
Greg Iacurci at CNBC reported:
[T]he wealthy, White and higher-educated were the least likely to lose their jobs [because pf the pandemic]. And those among them who did have largely recovered. […]
“The story of the recession for low- and high-income individuals is very different,” [Brown University economics professor John Friedman] said. “From an economic perspective, high-income families are by and large doing fine.” […]
Inequality is a marker of all U.S. recessions, [Hamilton Project Director Wendy] Edelberg said. But this recession is unique in that financial assets were either quick to rebound or remained unscathed, keeping the wealth of the rich intact, she said.
Some economic problems spotlighted by the pandemic but predating it are structural. Nick Hanauer and David M. Rolf wrote in Time:
Like many of the virus’s hardest hit victims, the United States went into the COVID-19 pandemic wracked by preexisting conditions. A fraying public health infrastructure, inadequate medical supplies, an employer-based health insurance system perversely unsuited to the moment—these and other afflictions are surely contributing to the death toll. But in addressing the causes and consequences of this pandemic—and its cruelly uneven impact—the elephant in the room is extreme income inequality. […]
How big is this elephant? A staggering $50 trillion. That is how much the upward redistribution of income has cost American workers over the past several decades.
Back in December, before the novel coronavirus was even known to exist by most people, Steve Denning at Forbes wrote “Understanding The U.S. Economy: Lots Of Rotten Jobs”:
When U.S. unemployment is at a 50-year low, why do so many people have trouble finding work with decent pay and adequate predictable hours? A new economic indicator—the US Private Sector Job Quality Index (JQI)—gives the answer: we have lots of jobs, but they are increasingly low-quality jobs. […]
The quality of jobs today is not quite as bad as it was in 2012, but it’s much worse than it was in 1990s and the early 2000s. Overall, we are seeing a secular decline in job quality.
A year ago this month, Annie Nova at CNBC reported:
The Great Recession has officially been over for a decade, but for many Americans, there’s still little reason to celebrate.
Many people’s finances haven’t recovered from the recession’s blows, according to a survey by personal finance website Bankrate.com.
“There are still tens of millions who are struggling to even get back to where they were before the economy took a turn for the worse,” said Mark Hamrick, senior economic analyst at Bankrate.com.
Here are more data from the September jobs report:
The Bureau of Labor statistics revised its tally of job gains in August from 1.37 million to 1.49 million, and in July from 1.73 million to 1.76 million. The private sector hired 877,000 people but all levels of government shed 216,000 jobs.
The civilian workforce fell in September by 695,000 after rising by 968,000 in August and falling by 62,000 in July.
The labor force participation rate fell to 0.3 to 61.4%. The employment-population ratio rose 0.1 to 56.6% in September.
Unemployment rates differ by race and sex. (September percentages in bold; August percentages in [brackets and italics].) Adult men: 7.4% [8.0%]; Adult women: 7.7% [8.4%]; Whites: 7.0% [7.3%] ; Blacks: 12.1% [13.0%]; Asians: 8.9% [10.7%]; Hispanics: 10.3% [10.5%]; American Indians: Not counted monthly.
Hours & Wages:
• Average hourly earnings of private-sector production and nonsupervisory employees rose in September by 1 cent an hour to $24.79
• Average hourly earnings for all employees on private nonfarm payrolls in September rose 2 cents an hour to $29.47.
• Average work week for all employees on nonfarm payrolls rose 0.1 hour to 34.7 hours in September.
• The manufacturing work week in September rose by 0.2 hours to 40.2 hours.
September job gains and losses for selected categories:
- Education and health services: 40,000
° Health care & social assistance: 107,700
- Professional and business services: 89,000
- Manufacturing: 66,000
- Temporary help services: 8,100
- Transportation & warehousing: 73,600
- Financial activities: 37,000
- Leisure & hospitality: 318,000
- Information: 27,000
- Retail trade: 142,400
- Construction: 26,000
- Mining and Logging: 1,000
- Government at all levels: -216,000
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