Dr. Bernard E. Anderson: August Jobs Report

An Economy on the Mend 

Dr. Bernard E. Anderson
The Wharton School, University of Pennsylvania
Senior Economic Advisor, National Urban League

The September Jobs Report shows the labor market slowly climbing out of a deep hole. Payroll employment grew 1.4 million in August, less than the 1.7 million in July, and 4.8 million in June.  The household survey, based on a larger sample and broader base showed 3,756 more workers employed.

The unemployment rate fell 1.8 points, to 8.4 percent. The labor force grew to 61.7 percent, and the employment population ratio -- which shows the share of population with jobs -- rose to 56.5 percent. The “real unemployment rate,” which includes those who stopped looking for work, declined 2.3 points to 14.2 percent. 

Business reopening fueled hiring. Retail trade employment grew by  249,000; leisure and hospitality by 174,000; education and health care by  147,000. The federal government showed the largest employment growth, 344,000, mostly workers hired to complete the Census. 

Most of the job growth was led by the 1.3 million workers recalled from temporary layoffs. There was little new job creation outside the layoff cohort. August’s job growth was fueled by consumer spending that was boosted by the $600 federal supplement to state unemployment compensation benefits. The expiration of the federal supplement suggests a reversal of strong job gains in the fourth quarter if there is no additional government stimulus in the next few months. 

The report shows widening of the racial employment disparity. Employment rose for both Black and white workers. But white unemployment declined 2.2 million to 7.3 percent, while Black unemployment rate declined 312,000 to 13.2 percent.  As a result, the Black/white unemployment gap widened to 1.78. 

The economy will not regain sustainable recovery without additional federal stimulus. The White House and Congress should get back to the negotiating table and hammer out an agreement to boost household income, support for small businesses, and aid to states and local government to support education and health care. COVID-19 is not under control. Until it is, the economy will continue to be in the doldrums, and low- and middle-income families will continue to suffer.