Friday's report by the Labor Department showed that August's 5.2% unemployment rate had dropped to 4.8%. The job gains last month were less than the modest 336,000 that was added in August and the lowest since December when employers actually reduced jobs.
There are some signs that the economy is beginning to emerge from the grip of the coronavirus delta variant. Restaurant traffic is increasing, new COVID-19 cases decreasing, and consumers more willing to spend. However, new infections were still high at September's beginning. Employers are still having difficulty finding workers as many of those who lost their jobs due to the pandemic have not yet started looking. The supply chain bottlenecks have also gotten worse, slowing factories and restraining homebuilders, as well as emptying some store shelves.
According to Friday's report, the proportion of Americans with a job or looking for one fell from 61.7% down to 61.6% in September. This is well below the pre-pandemic level at 63.3%. Many economists believed that more people would search for work after the reopening schools, the end of federal unemployment benefits, and the rapid pace of vaccinations. It didn't happen last month.
The drop in labor participation last month was entirely attributable to women. This suggests that many mothers who work are still home caring for their children. Labor participation was not affected for men. Although schools reopened in September 2011, some after-school programs were not yet available to provide all-day childcare. In many cases, child care has become more expensive and scarcer. COVID epidemics have also caused some school closures temporarily, making it difficult for working mothers to keep their jobs.
Lael Brainard is a member of Fed's Board of Governors. In a recent speech, he noted that COVID-19 epidemics in September resulted in 2 000 schools closing for six days on average in 39 states.
Many economists believe that the majority of the 3 million people who lost their jobs or stopped looking for work after the pandemic will resume their search as COVID declines. They note that it took many years for the percentage of people seeking work or working to recover to pre-recession levels. If someone is actively seeking work, they are not considered unemployed.
A sharp decline in education jobs in local governments was another factor in the weakening of hiring. Despite the reopening schools, the number of these jobs dropped by 144,000 last month. This decline indicates that not all local schools are hiring as many people as they usually do. Many schools have struggled to find enough cafeteria workers, bus drivers, and support staff.
For most industries, except education, September saw job growth that was equal or better than August. For example, 47,000 new jobs were added to transportation and warehousing after the rise in online shopping. Manufacturers added 26,000. Manufacturers added 26,000.
In September, several enhanced unemployment benefits were terminated, including a $300-per-week federal supplement and programs that covered gig workers and those who had been jobless for at least six months. The end of these programs seems to have had a limited effect on the number people looking for work.