U.S. Job Growth Rate Reaches 2021 Nadir

October 12, 2021

Photo courtesy of Survey Center on American Life

According to the Labor Department’s report released this morning, U.S. job growth fell to the slowest pace of the year in September due to the Delta variant’s rise and the persisting labor shortage. 

According to the report, although the economy created 194,000 jobs in September, that is the smallest gain since December 2020 and down from 366,000 jobs added in August. Additionally, although the unemployment rate reportedly fell from 5.2% to 4.8%, this is because many workers ended their job search and exited the labor force entirely in September – leading to a smaller labor pool. 

These numbers cement the ongoing reality that the pandemic and global supply shortages and bottlenecks are hindering the nation’s economic recovery. According to the report, the driving force behind September’s weak payroll gain was a decline in public-sector jobs, mainly at schools; although schools have largely reopened, many have faced a spate of Covid-19 outbreaks that have led to ongoing closures. But this may not be the only driving force. According to an Indeed survey, the number one reason why people are avoiding the workforce is fear of catching Covid-19. 

In terms of specific industries, the report found that employment in private-sector industries rose by 317,000 in September, with modest gains specifically reported in the leisure and hospitality businesses, retailers, and factories. What remains true is that employers are desperately seeking workers, but workers who left the labor force have yet to return. According to Labor Department figures, there were nearly 11 million unfilled jobs at the end of July – which is the highest ever recorded and exceeds the number of unemployed workers seeking jobs. 

The real mystery: why is the labor force still shrinking? The report found that the labor-force participation rate dipped slightly to 61.6%, down from 63.3% in February 2020 ahead of the pandemic. Unfortunately, predictions that a combination of ending enhanced unemployment benefits, widespread vaccination, and higher wages would result in a mass return to the labor force simply hasn’t materialized. 

There was one positive trend recorded in the Labor Department’s report: Covid-19 infections have declined in recent weeks. While this is good news on its own, it also will likely lead to more labor force returns down the line. According to Indeed economist Nick Bunker, “if previous declines in case counts are any guide, the reduced salience of the pandemic will lead to more folks returning to the labor force.” 

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