Up, up and away with US Jobs Report for October

 Friday’s report form the US Dept. of Labor gave an unexpected rise of 531,000 nonfarm jobs to the country, in October, exceeding expectations of 431,000 and with an upward revision of the August and September reports sending a balloon into the sky after last month’s dismal report; and, joined by a decrease in the general unemployment rate to 4.6 percent, there was joy on Main Street as well as Wall Street.

While there's still a loss of 3.8 million jobs lost since the Covid pandemic hit America, nearly all economists were unanimous in not simply their joy, but also the feeling that the nation was well on the way to recovery.

There was a lot of good news, and according to The New York Times, was that “especially vulnerable sections like hospitality and retail, where workers are dealing face to face with customers,” made gains, even while fears of getting sick are still prevalent.

“This was a strong employment report that shows the resilience of the labor market recovery from the pandemic,” said Scott Anderson, chief economist at Bank of the West in San Francisco, to the Times

In fact, amidst the joy, the reality is that this concentration causes many to worry, not just employers, but economists and academics alike who fear that this is an area that does not allow for sustaining not just a national economy, but a strong middle class.

Most employers, nevertheless, are still grappling with finding enough qualified workers, and many of those employed in the gain area of restaurants and hospitality are reevaluating, (as noted last month), their net worth, and are discerning if it is worth it to work long hours on their feet, rushing about, with little chance of advancement, and facing the rising costs of housing and food costs (which have shot up by 3%), and most importantly child care.

One group, in particular, that has faced this challenge are Black and Brown women, who make up a large share of the jobs in leisure and hospitality, and the current increase of 164,000 would have been even higher, had there been higher wages, and affordable child, or even elder care.

For women, the results for October showed only a modest gain of 180,000, as this group on the whole, women of color exempted, also faces the challenge of child care, something that was supposed to have been solved in September, with the expected increase to classroom learning, versus the pandemic driven remote. Yet, the patchwork of school openings and mask mandate protests, dimmed expectations.

Overall the October labor force participation rate was relatively flat at 61.6 percent with only a slight increase for those aged 25 to 54, peak working years for many. A fact that has heads shaking, but many feel is directly attributable to the virus, and a reluctance, if able to work, fear based decisions, for some, as they work shoulder to shoulder.

Some employers are giving enhanced benefits, transportation allowances, and varied schedules and that has worked well for one hotel in St. Louis, Mo. cited the Times.

This mix and match approach is valued by economists, especially Mary Daly, president of the Federal Reserve Bank of San Francisco, who told the Times, “I, as an economist, predict that will be better for job matches and a better economy in the long run.”

Largely, the problem is still increasing vaccinations among Americans,especially in Republican dominated areas of the South, where vaccination efforts have been politicized, and angry mobs have fought against mask mandates, and vaccination for school personnel, and first responders, and has now spread to Northern cities, such as New York, and Chicago.

Somewhat heartening is the greater rate of vaccination, where approximately 70 percent of the US has received at least one shot, and the subsequent weakening of the virulent Delta Virus strain has given some the impetus to travel and, return in greater numbers to restaurant dining, a fact reflected is the notable increase in food and drinking establishments to 119,000.

Equally concerning is that the Bureau of Economic Analysis  said that the US economy saw growth of only 2.0 percent in the 3rd quarter, noted The Washington Post, in late October: “The coronavirus tore through unvaccinated communities during much of the July-through-September period measured in Thursday’s gross domestic product report, eviscerating economists’ expectations from earlier in the year of continued rapid growth near the 6.3 and 6.7 percent seen in the first two quarters of 2021.”

Recently the Commerce Dept. reported that the economy grew by 0.5 percent, in the same quarter, with both attributing the slowdown to the virus.

What is now abundantly clear, to many, is that resolving the US economy will take time, and patience with increased efforts to gain greater vaccination, above all, but, also further legislative solutions to the country's most pressing problems that have been further delineated, and exposed, as a direct result of the pandemic.

All of this is set against a backdrop of supply chain problems: backorders of parts, whole merchandise, a shortage of workers, and ships sitting at ports, waiting to dock. 

The conundrum is that for many Americans the enforced lockdowns swelled bank accounts, not only with cash unspent, but a round of stimulus checks that many families, facing uncertainty, salted away, and are now spending it. And, they are joined by those at home still clicking away at the goodies on their computer screens. 

Optimism stil reigns and the decrease in the variant is one reason, and also that there was some forethought, with the coming holiday season as some “Businesses were able to build up their inventories — or at least slow the supply-chain bleeding — ahead of the holiday season, despite continued logistical snarls. People may have to be flexible on the exact gifts they pick out for friends and family. But they’ll probably have options.”

US Jobs in August take a nosedive

 

After a huge surge in nonfarm jobs for July economists, lawmakers and government officials were looking forward to even higher numbers for August, yet on Friday the US Labor Dept. released news that dashed all hopes with the dismal figure of 235,000 jobs, that most have attributed to the Delta Variant and its huge push into the economic behavior of Americans, just as they were going back to a relative version of normal, and especially going to restaurants, bars and other entertainment venues.

Leading the pack was Diane Swonk, chief economist at Grant Thornton who told The New York Times, “Delta is a game changer, '' and “it’s not that people are laying off workers in reaction to Delta but people are pulling back on travel and tourism and going out to eat and that has consequences.”

While there is still some activity in these areas, many people are reconsidering plans, and especially those that have children under 12 in their homes, for fear of exposure; and, with the last blush of summer fading, and a return to in person learning, pulling back, as Swonk says, is a sea change in consumer behavior, the driver of the US economy.

While most acknowledge that there is still some resilience in the American economy, no one is taking the future for granted, especially with large parts of the country unvaccinated.

“Still, this marked an eighth consecutive month of net job growth, and brought total employment closer to pre-pandemic levels,” reported Yahoo Finance, and as President Biden later noted.

Reflected in the numbers are high contact employees, especially in low wage industries that require face to face interactions, such as restaurants and bars. This creates a chilling effect on these businesses, as many have attempted to climb from the hole that the Alpha variant created. And, the Times reported that the reservation system Open Table, after a resurgence in the summer, “are now 10 percent below where they were before the pandemic.”

Shopping, a sport for many, took a decline with retail by 29,000, and the number of people working at home also took an increase, but with the report being created in mid month, online shopping figures are not available.

Hits taken by Hurricanes Henri and Ida, are also not reflected.

The good news is that most economists believe that despite all, “in the current quarter from the annualized rate of 6.5 percent in the spring, the economy is expected to remain in expansion mode for the rest of the year.”

The Delta variant is the sword of Damocles hovering over US economics and with the dearth of vaccinations, especially in the South, fragility is the watchword as Carl Tannenbaum, chief economist at Northern Trust, said in his interview, “We get another reminder of how significant the pandemic is in determining progress in our economy.”

Predictably, the Biden administration already burdened by the pullout from Afghanistan and the hurricanes, also took a punch in the gut over the news, as they try to pass legislation to increase jobs and expand infrastructure to include social capital, both in abeyance with this report.

The White House released a transcript of the president’s reaction to the news and it was clear that he was trying to put the best face on it, when he noted, “But despite the impact of the Delta variant — and I’ll talk a little more about that in a minute — what we’re seeing is an economic recovery that is durable and strong.”

 

Taking a long view, he noted, “The Biden plan is working.  We’re getting results.  America is on the move again.  And today’s revision of previous month job gains, with the revision of the July numbers — this report means that we have been adding an average of 750,000 jobs per month, on average, during the past three months.

  

While I know some wanted to see a larger number today, and so did I, what we’ve seen this year is a continued growth, month after month, in job creation.  It’s not just that I’ve added more jobs than any first-year President — in the first year of any President — it’s that we’ve added jobs in every single one of my first seven job reports.  And wages are going up.”

In a year over year analysis, wages did increase to 4.3 percent. 

Labor also gives a dual note when they say:

 “Average hourly earnings for all employees on private nonfarm payrolls rose by 17 cents to $30.73 in August, . . . and “average hourly earnings of private-sector production and nonsupervisory employees rose by 14 cents to $25.99.”

Taking wages on the whole proves problematic, since ”The data for recent months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages. However, because average hourly earnings vary widely across industries, the large employment fluctuations since February 2020 complicate the analysis of recent trends in average hourly earnings.”

One significance of the report is that Labor Force Participation stayed the same at 61.7 percent in August, a bellwether, say some of next month when schools across the country will be in person, and parents and caregivers are expected to return to offices, if not the service industry.

Another boon is that the long term unemployment population, those that have been jobless for 27 weeks or longer dropped from 3.4 million to about 3.2 million, noted The Hill.

While unemployment for whites fell from 4.8 percent to 4.5 percent, even while LFP stayed the same, Black workers faced an increase in unemployment from 8.2 percent to 8.8, with 0.8 in their participation, which some attribute to an earlier bump in service jobs, but might drop in the September report.

Hispanics faced a drop from 6.6 to 6.4, but Asians dropped from 5.3 percent to 4.6 percent, which reports say might be attributable to a decline in LFP, by 0.4 points.

Gains were seen in professional and business services at 74,000, but this is a catchall category that can mean anything from office temps to copier services, and everything in between.

Transportation and warehousing also made gains, thanks to all of that online ordering at 53,000, manufacturing, despite supply chain bottlenecks, came in at 73,000, and those attendant couriers, messengers and warehouse personnel came in at a strong 20,000.

Finally,  it should be noted that while 5.3 million jobs were recovered since the onset of the pandemic, and using February 2020, as a baseline; but, in contrast there were 5.3 million fewer jobs in August, than in February of 2020.