October Employment Roars Back

 Popular Economics Weekly

MarketWatch

Who said the labor shortage is holding back job gains? Not for the moment. It looks like the roaring 2020s are beginning to roar in earnest this fall as we slowly exit the pandemic.

Total nonfarm payroll employment rose by 531,000 in October, and the unemployment rate edged down by 0.2 percentage point to 4.6 percent, the U.S. Bureau of Labor Statistics reported today.

“Job growth was widespread, with notable job gains in leisure and hospitality, in professional and business services, in manufacturing, and in transportation and warehousing. Employment in public education declined over the month.”

People are returning to work, in part because 9 million lost jobless benefits in September as the federal extended unemployment insurance program was terminated.

The government revised the number of new jobs created in September to 312,000 from 194,000, based on new information from the businesses surveyed, said MarketWatch. And the job gains in August were raised to 483,000 from 366,000.

A total of 5.6 million payroll jobs have been created this year to date and average hourly wages have increased 4.6 percent. President Biden touted that these numbers showed that the U.S. now had the fastest job growth in the developed world.

Leisure and Hospitality, Education & Health, and Professional/Business added 320,000 jobs, manufacturing and construction added 104,000 jobs, while governments lost 73,000 jobs (from a loss in public education).

The service sector is roaring back, in other words, as restaurants, hotels, theaters and other companies in the hospitality business created 164,000 new jobs last month.

The jump in payroll employment was presaged by a recent poll of senior business executives in service-oriented companies, such as retailers and banks that rebounded to a three-month high of 58.2 from 54.9 in September, IHS Markit said Friday.

A similar survey of manufacturing activity slipped to 59.2 from 60.7, but it was still quite high. Any reading over 50 signals growth and numbers are above 55 are exceptional.

CDC.gov

Another reason for the payroll surge is the COVID infection rate continues to decline. This is in part because 70 percent of Americans have been fully vaccinated, a total of 193 million Americans

“The current 7-day moving average of daily new cases (68,793) decreased 7.4% compared with the previous 7-day moving average (74,290). A total of 45,655,635 COVID-19 cases have been reported as of October 27, 2021,” reported the CDC.

And there is reason to believe even more workers will return to their jobs this fall and winter—especially moms as their children return to schools and become vaccinated with the new children’s’ vaccines.

What could dim this optimistic prediction? Very little, in my opinion. The euro area is also roaring back with an annual growth rate of 9 percent last quarter, according to Nobel Laureate Paul Krugman.

And the rest of the world is slowly recovering from the pandemic. It’s really a matter of continuing to vaccinate the unvaccinated worldwide, which means restoring the supply-chains in this deeply interconnected world.

Is there anything that could prevent it from being restored? Maybe another war with…? Let’s hope not.

Harlan Green © 2021

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Some Workers Reluctant to Return to Jobs

 Financial FAQs

CNBC.com

“In the week ending May 15, the advance figure for seasonally adjusted initial (jobless) claims was 444,000, a decrease of 34,000 from the previous week's revised level. This is the lowest level for initial claims since March 14, 2020 when it was 256,000,” says the US Bureau of Economic Analysis.

Most of the decline came from a decrease in those getting benefits through pandemic-related emergency programs. States showing the largest declines included Georgia (-8,216), Kentucky (-7,175) and Texas (-4,828), according to unadjusted data. New Jersey showed the biggest gain, with 4,384.

Along with the steady slide in the headline number, the total of those receiving various government benefits tumbled by nearly 900,000 to just shy of 16 million, according to BEA data through May 1.

The high number still receiving benefits has caused 23 states to back out of the $300 weekly federal bonus checks as soon as June, with Florida being the latest state to announce it is canceling extended federal unemployment benefits. That'll cut off more than 3.6 million people from getting enhanced benefits related to the pandemic that Congress has authorized to expire in September..

State governors claim that this unemployment coverage discourages workers from taking jobs, citing labor shortages. Some economists and analysts disagree, noting that several factors are preventing people from finding suitable work, including lack of child care and fear of contracting COVID-19.

The 2 million person gap between Job Openings and actual Hires in the government’s latest JOLTS report is growing evidence that there is a red-hot demand for workers after what I call the pandemic recession, even with the high number out of work and still receiving benefits.

Why the record number of job openings at the same time so many are still receiving benefits? It will take time for workers to find suitable jobs, while employers need to raise their minimum wages for essential workers in the service sector (that are the lowest paid) to attract them back to work.

Service sector employers such as Amazon say they are raising their minimum wage to $15 per hour, while Bank of America is raising the minimum wage from $20 to $25 per hour for its clerical workers.

It is perhaps why a record number of small businesses said they could not fill open jobs in April, adding to a growing national controversy over whether extra unemployment benefits are keeping scores of people from re-entering the labor force.

Some 44 percent of small businesses reported job openings went unfilled, according to the National Federation of Independent Business. The NFIB is the nation’s largest small-business lobbying group.

It is less understandable why the red states are the first to terminate extra aid to their own lowest-paid workers before September, maintaining that it is keeping them from working in jobs that probably pay less than the weekly benefits (aid that is also free $$ to the states), as I said.

It not such a good idea because cutting off the additional benefits is exacerbating the income inequality that has been a major cause of record drug use and suicide rate among high school-educated white males that have lost formerly high-paying jobs in the rust belt.

It also tells us that red states governors, (such as Arkansas Governor Asa Hutchinson in a recent NPR interview), think little of the plight of Arkansas’ own essential workers that fill most of the lower-paying jobs after having weathered one year of pandemic hell.

The good news is that workers are now getting to pick and choose what jobs they would prefer. That is just one of the changes we are seeing as the 2020’s economy begins to roar.

Harlan Green © 2021

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen