Puzzles hanging over job market ahead of report

Whether or not people are looking for work may overshadow hiring numbers

WASHINGTON — When the U.S. government issues the September jobs report Friday, the spotlight will fall not only on how many people were hired last month. A second question will command attention too: Are more people finally starting to look for work?

To an extent that has surprised economists, many people who lost or quit their jobs during the pandemic recession have yet to look for work again despite a robust economic rebound that has left many employers desperate to hire.

The number of Americans applying for unemployment benefits fell last week.

Unemployment claims fell by 38,000 to 326,000, the first drop in four weeks, the Labor Department said Thursday. Since surpassing 900,000 in early January, the weekly applications, a proxy for layoffs, had fallen more or less steadily all year. Still, they remain elevated from pre-pandemic levels: Before COVID-19 hammered the U.S. economy in March 2020, weekly claims were consistently coming in at around 220,000.

Across the country, persistent labor shortages have hampered various industries. Expectations that more applicants would flow into the job market in September as schools reopened and federal unemployment benefits ended have dimmed. A key reason is that coronavirus cases stemming from the delta variant remain high, although the pace of confirmed infections has slowed in recent weeks.

Many economists still think most of the roughly 3 million people who lost jobs and stopped looking for work since the pandemic struck will resume their searches as COVID-19 wanes. It took years after the 2008-2009 recession, they note, for the proportion of people working or seeking work to return to pre-recession levels. The government doesn’t count people as unemployed unless they’re actively looking for jobs.

Still, there are signs that some of the factors that have kept many jobless people on the sidelines may be starting to ease. If so, a larger pool of job seekers might have helped boost hiring in September — or, if not, could do so in the coming months.

According to a survey by the Census Bureau, for example, the number of people who aren’t working because they must stay home to care for a child declined by half in September compared with June. That figure barely dropped last fall, when many schools remained closed and conducted virtual learning.

Several enhanced unemployment benefits ended in early September, including a $300-a-week federal supplement as well as programs that covered gig workers and people who were jobless for six months or more. So far, ending those programs appears to have had only a small effect on the number of people seeking work.

Research by economists at Goldman Sachs found unemployed people who were looking for work were much more likely to take jobs when their benefits ended. But the early cutoffs did not cause people to start searching again, Goldman concluded.