U.S. Unemployment Rate Fell to 8.4% in August as Hiring Continued
Category: News & PoliticsVia: vic-eldred • 3 weeks ago • 46 comments
By: Sarah Chaney (WSJ)
Unemployment fell sharply in August and hiring gains moderated, as the U.S. economy continued to recover from the steep downturn triggered by the coronavirus pandemic.
Employers added 1.4 million jobs last month, helping push down the unemployment rate to 8.4% from 10.2% in July, Friday’s Labor Department report said. The jobless rate’s decline—it has dropped from near 15% in April at the beginning of the pandemic—put it below the peak from the 2007-2009 recession.
That puts unemployment in line with past major recessions, though it is significantly higher than pre-pandemic levels. The jobless rate stood at 3.5% in February, a half-century low, just ahead of the coronavirus crisis .
State reopenings of their economies helped boost employment this summer, but the gains have cooled in recent months. The economy is operating with about 11.5 million fewer jobs than in February.
“We’re in a very deep hole, and we’re working our way out of it,” said Gus Faucher, economist at PNC Financial Services Group. “We continue to see very good improvement in the labor market, but I think the improvement is going to be slower going forward.”
The economy continues to face uncertainty with an average of 36,000 new Covid-19 cases a day and an increase ahead of Labor Day weekend, prompting warnings from some governors about persistent risks from the virus.
Economists expect the initial hiring spurt from business reopenings to ease as state restrictions are lifted at a slower pace than earlier in the summer. Further, the number of unemployed individuals saying their layoffs are permanent rose last month to 3.4 million, a headwind to the pace of recovery in future months.
Still, the number of unemployed individuals saying their layoffs were temporary declined to 6.2 million in August from 9.2 million in July, indicating many employers are bringing back workers.
Retail and government hiring helped drive August’s jobs gains. Super centers and home improvement stores have seen employment increase during the pandemic, and other types of retailers, including department and furniture stores, are seeing a rebound after a deep decline. Meanwhile, Census hiring boosted federal jobs while state and local employment has held up relatively well as the school year gets under way.
Federal Reserve Chairman Jerome Powell said Friday’s report was good news but that the economy was likely to require low interest rates for years.
“I would say today’s jobs report was a good one,” Mr. Powell said in an interview with National Public Radio. “Through May and June, we got quite a few people back to work.”
The economic readings come as talks between the White House and Democrats over possible further coronavirus aid have stalled, and as Congress faces an approaching deadline to keep the government running after its current funding expires Oct. 1.
Democrats and Republicans remain at odds over the size and contents of another installment of relief, on measures such as additional jobless aid and money for states and cities, with no visible progress notched over the August break.
“I don’t know if there will be another package in the next few weeks or not,” Senate Majority Leader Mitch McConnell (R., Ky.) said at a Kentucky event this week. House Democrats, who passed a $3.5 trillion package in May, have said they would be willing to settle for a $2.2 trillion bill. Treasury Secretary Steven Mnuchin this week said Republicans could support legislation that cost somewhere around $1.5 trillion.
Meanwhile, House Speaker Nancy Pelosi (D., Calif.) and Mr. Mnuchin agreed on the need to quickly pass a short-term spending bill, according to people familiar with the discussion. In a phone call Tuesday, the two agreed to refrain from trying to add any controversial policy measures to the spending bill, in an effort to avoid a government shutdown.
Unemployment rates for Black, Hispanic and white workers fell in August, while holding steady for Asian workers, the Labor Department said. Joblessness is lowest among white Americans—7.3%—and remained above 10% for Black, Hispanic and Asian workers, pointing to divergent economic outcomes from the pandemic. The unemployment rate for those without a high-school diploma was 12.6%, while workers with a bachelor’s degree or higher were unemployed at a 5.3% rate.
BluePearl Pet Hospital, a network of veterinary medicine hospitals across the country, is in hiring mode, thanks to a sharp rise in demand for vet services, said Jimmy Barr, the company’s chief medical officer. He attributes the increase in vet visits, in part, to a rise in pet ownership during the pandemic.
Individuals working from home are spending more time with their pets during quarantine and have more flexibility to seek care, Mr. Barr said.
The share of Americans working or seeking work rose in August to 61.7% from 61.4% in July and a pandemic low of 60.2% in April. More individuals looking for work bodes well for job growth and the broader economic recovery.
Shelby Burnette, age 19, started searching for work this summer.
The Newport News, Va., resident was laid off from her part-time job at a clothing store this spring. She held off on immediately applying for jobs because she didn’t feel safe returning to work given that a pre-existing lung condition put her at higher risk from the effects of the virus.
Ms. Burnette said she began filling out job applications online in June because she wouldn’t be able to financially sustain herself once the extra $600 a week in unemployment benefits expired at the end of July. Job prospects were slim, though.
“When I would apply, I wouldn’t hear anything back or sometimes there wasn’t anything to apply to. It was kind of like, ‘What am I supposed to do?’” Ms. Burnette said.
About a month ago she was hired to help supervise children at a local day-care center. She said she hopes to find another job with a higher wage soon, though.
Several large companies have warned of job cuts in recent days, a sign the labor market could face uneven performance this fall.
Economists say new company layoffs reflect a shift in employers’ mentality from earlier in the crisis, when many expected shutdowns would be over in a matter of weeks.
“If you are laying people off now, you kind of know that this situation isn’t going anywhere anytime soon,” said Martha Gimbel, economist at Schmidt Futures, a philanthropic initiative. “It is highly likely that any layoffs that are happening now are intended as permanent.”
Some companies that reopened in late spring and early summer hired back a portion of their furloughed workers but aren’t seeing enough demand to bring employment back to precrisis levels.
Faust Hotel and Brewing Co. laid off all employees except for managers when it temporarily closed at the onset of the pandemic. The New Braunfels, Texas, company slowly brought back workers for its reopening at the end of spring, said McKenna Lewis, the hotel’s guest-services coordinator.
Faust is still operating with less staffing than before the economic crisis hit earlier this year, and Ms. Lewis doesn’t expect it to ramp up hiring. Hotel reservations were hurt by a decline in tourist traffic this summer. Business likely won’t pick up soon, especially now that Wurstfest is canceled, Ms. Lewis said, noting the German-sausage and drinking festival boosted New Braunfels’s fall tourism in pre-pandemic times.
“Ultimately we’re just trying to remain hopeful that people want to see us survive,” she said.