WASHINGTON, D.C. — What began as a hopeful summer of rapid recovery in jobs has turned more sobering: Employers pulled back on hiring in August, converted more furloughs into permanent layoffs and braced for hard times ahead.
After an unexpectedly strong rebound of almost 5 million jobs in June, payroll gains slowed to 1.7 million in July and weakened further last month, to 1.4 million, the government said Friday.
While the latest increase was bigger than many analysts expected, the August job numbers were inflated by the addition of about a quarter-million temporary census workers. And the economy is still 11.5 million jobs short of where it was before the pandemic as unemployed workers struggle with lost income, a drastic cutback in federal help and continuing costs for housing, food, and other everyday expenses.
The U.S. unemployment rate fell in August to 8.4%, from 10.2% in July and a post-Great Depression record of 14.7% in April, but those numbers don’t include millions of people who have dropped out of the labor force or an under-count of the unemployed due to survey measurement anomalies acknowledged by government statisticians.
California’s jobs report for August will be released in two weeks.
The softer jobs market in August offered new evidence that the economic recovery is losing steam after picking up in May when many businesses reopened. More recently, COVID-19 has been surging in parts of the country previously little affected by the pandemic.
Some economists believe regaining momentum on jobs will be harder in coming months.
“Right now, we’re at a bit of an inflection point,” said Erica Groshen, former commissioner of the Bureau of Labor Statistics, which produces the jobs report. “We’re turning from the very rapid, easy recall of workers to moving workers into new jobs that are needed now, and to the shakeout that is coming from all of the damage that has been done.”
That damage includes business closures, consolidations and other cost-cutting moves that are common in recessionary times. “It’s tough, a big pill to swallow,” said John Neiman, director of operations at Southern California Messengers, which is closing eight out of 13 delivery centers in early October.
Uncertainty is heightened by the continuing medical crisis and the looming presidential election.
President Trump, who earlier focused on what he claimed was unprecedented economic progress, has now shifted emphasis to trying to blame Democrats and by extension his opponent, Joe Biden, for violence that’s accompanied protests against racism in various cities. The monthly jobs and unemployment figures are considered one of the most important economic indicators, and there is one more report before election day on Nov. 3.
Other labor market data suggest that the slowdown in job growth is likely to continue in September. The Federal Reserve, in a report this week summarizing U.S. economic activity, said hiring had generally turned softer in recent weeks.
For the western region including California, the Fed said: “Employment levels increased marginally on net, but many employers curtailed hiring efforts to control costs in the challenging economic environment.”
One bright spot in the economy has been the strong housing market. Demand and prices have surged this summer, thanks in large part to record low mortgage rates. Residential construction has recovered more than 80% of jobs lost earlier this year. But the housing growth, while providing a lift to the overall economy, is largely benefiting higher income households.
“It’s one of the main bad things about this pandemic —it’s reinforcing the disparity,” said Richard K. Green, a public policy professor and real estate expert at USC.
