Hiring slows sharply, casting long shadow on recovery from pandemic

The winding down of summer was supposed to set the stage for a full-throated recovery as kids return to school and workers flood back into offices, but the disappointing August employment report Friday was the latest omen that the economic future looks more cloudy than bright.

Employers added just 235,000 new jobs last month. Most forecasters were expecting three times that number, after the economy expanded by about a million jobs in each of the prior two summer months. Retail stores and restaurants and drinking places shed jobs last month, and, even as the unemployment rate dropped to 5.2%, hundreds of thousands more workers were sidelined from working or looking for jobs.

The explanation, yet again, was that the pandemic has delivered another economic curveball. The Delta variant of the coronavirus has not only struck hard at the unvaccinated, but also has spread into groups and age cohorts that had seemed relatively unaffected by earlier strains.

As a result, the wave of consumer spending that was propelling the recovery has faltered. So have the plans of many businesses to move back toward normal operations.

And both manufacturing supply chains and the supply of workers remain troubled.

"We're still deep in the hole, and without [government] support, plus with the virus raging, I think the rosy scenario for this fall becomes really dark really fast," said William Spriggs, chief economist for the AFL-CIO, the labor organization.

As recently as two months ago, the images in economists' crystal balls looked decidedly bright. Most signs supported the idea of an accelerating recovery.

The scheduled resumption of in-person classes across the nation's public school systems would free up thousands of workers — especially women — who had been constrained by childcare needs.

Expanded federal payments to the unemployed, which conservatives and some other analysts had blamed for worker shortages, were ending.

And the expected large-scale return of workers to their traditional workplaces in urban centers would add to the general "opening up" of the economy.

Now, analysts warn that fewer parents and other caregivers may rejoin the labor force right away. More older people, with renewed fears of health risks, could remain on the sidelines or take the plunge into early retirement.

"I'm frustrated," said Cindy Fain, 62, who lives in rural Virginia and has been searching for full-time work since early this year. "I have not been able to do any kind of in-person networking," she said. "And I'm definitely very concerned about the fact that there isn't any clear horizon with this virus."

Another concern to economists is that the share of primeage workers getting hospitalized and dying from COVID-19 today looks to be higher than in prior waves of the pandemic.

And outbreaks at the outset of the new school year in some places have heightened uncertainties about the near future.

The AFL-CIO's Spriggs was particularly worried about the roughly 11 million jobless Americans who are expected by Labor Day to lose unemployment benefits entirely or the extra $300 federal weekly supplement.

Eviction moratoriums affecting renters also just expired.

The Biden administration should have done more to extend aid, he said, instead of what he saw as caving to pressure from inflation hawks and turning its focus to longer-term infrastructure needs.