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Slowdown Reveals Mounting Pain

RFP
Payroll employment rose by 661,000 jobs in September, less than half the 1.5 million pace we saw in August. Government employment fell by 216,000 with 34,000 of those losses due to a reduction in the ranks of temporary Census workers; the remainder was due to a drop in education employment at the state and local levels. Many schools and colleges went back to online courses, which cut into the support and administrative staff in schools and on college campuses. Total employment is still down 10.9 million jobs since February. That is 24% more than we lost to the Great Recession in 2008-09 in about half the time. Employment at the state and local levels is still down more than 1.2 million since February. Those losses are expected to compound unless Congress acts on aid - we need more help for households, businesses, and states and local governments, ASAP.

Private sector employment rose by 877,000 jobs, nearly 40% below the 1 million pace of August. Leisure and hospitality jobs drove overall gains. The survey week this year included the Labor Day holiday. Most seasonal workers are laid off after the last big holiday of the summer comes to an end. Leisure and hospitality jobs actually dropped before seasonal adjustment for the month. Many bars and restaurants reopened with fewer restrictions but those gains could be short-lived once temperatures drop. COVID is airborne and much more contagious in indoor venues. The level of employment in that sector is still off more than 3.8 million jobs from a peak in February.

Retail trade and health care continued to call workers back. Retailers are still reopening and starting to hire to deliver better online service during the holiday season. Retail employment is expected to actually drop as we get into November, on a seasonally adjusted basis. Health care workers continue to be recalled as people catch up on postponed elective surgeries and doctor and dental appointments missed earlier in the year. The number of home health care jobs also increased. Nursing and residential care jobs were almost unchanged after falling in recent months. This reflects shifts many people have made in where their elderly loved ones live. Day care employment was up for the month as parents scrambled to deal with hybrid and online education.

Warehousing and transportation jobs increased 74,000 in May. The largest gain was in warehousing and storage. This separate from retail gains at the largest online retailers, which are included in retail, but reflects a move by smaller retailers to move more of their businesses online.

Professional services slowed dramatically during the month. Temporary hires accounted for less than 10% of total gains. The largest categories for improvement included jobs for people who service buildings and dwellings, which likely reflects the push to try to reopen some downtown offices, architects and computer designers.

Manufacturing picked up 66,000 jobs during the month, The strongest gains were in big-ticket durable goods, including motor vehicles and machinery. Construction employment was up by only 26,000. More than half of those gains could be attributed to a pickup in residential construction activity. Remodeling, repairs and construction of new homes have all increased significantly since lockdowns.

Average hourly earnings essentially flatlined during the month but were still 4.7% above year-ago levels. That is close to what we saw in August but does not reflect an acceleration in overall wage growth. Instead, it reflects a shift in the composition of employment relative to last year: We have a lot fewer low-wage workers employed than we did a year ago.

The unemployment rate dropped from 8.4% to 7.9%, but participation in the labor market also fell. Overall participation in the labor market was 61.4%, a decline of 0.3% from August and a full 2% down from the February peak. The drop in the monthly participation rate was driven by Hispanic women and Black men. The number of people no longer participating in the labor force since February moved up to 4.4 million in September from 3.7 million in August. The unemployment rate for Black workers held at 12.1% in September, nearly double the unemployment rate for white workers. White workers are being hired back much more rapidly than Black workers, which is exacerbating inequality.

The unemployment rate excluding temporary layoffs rose to 6% from 5.8% during the month, while the ranks of the long-term unemployed (27 weeks or longer) jumped by 781,000. Regular unemployment insurance for those workers is expiring. They will have to apply for the special pandemic unemployment insurance, which expires at year-end. This all points to a more permanent scarring of the labor market and ups the risk that the COVID recession could metastasize into a more traditional and long-lasting recession.

Bottom Line
Employment is slowing at the very moment that aid from the government has lapsed. Headwinds will only intensify as temperatures drop and the risk of another wave of infections rises. The best way to sustain the recovery is to better manage contagion and provide lifelines for those who are suffering the worst consequences of COVID so that more of us make it to the other side of this crisis.

Media Contact
Karen Nye
T +1 312 602 8973
Karen.Nye@us.gt.com

Other Inquiries
Na Tasha Lowe
T +1 312 754 7368
NaTasha.Lowe@us.gt.com