Puzzle overhanging US job market: When will more people return?

WASHINGTON — When the U.S. government issues the September jobs report today, 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.

Across the country, widespread and persistent labor shortages have hampered industries from restaurants and hotels to manufacturing and construction. 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.

Speaking at a news conference last month, Federal Reserve Chair Jerome Powell acknowledged that a surge of job seekers didn’t likely occur last month, largely because of a renewed fear of infection.

“It didn’t happen with any force in September, and a lot of that was delta,” Powell said.

Many economists still think that 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 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 had barely dropped last fall, when many schools remained closed and conducted virtual learning. The new census figures suggest that more parents, particularly mothers, might have rejoined the workforce last month as the school year began and their children returned to school.

In addition, an August survey by the job listings website Indeed found that the proportion of unemployed Americans who said they’d like to find a job once the school year began had more than doubled from just two months earlier.

Yet there are also signs that it might be too soon to expect a flood of parents to have rejoined the labor market. Lael Brainard, a member of the Fed’s Board of Governors, noted in a recent speech that COVID-19 outbreaks in late September caused 2,000 schools to close for an average of six days in 39 states.

“The possibility of further unpredictable disruptions,” Brainard said, “could cause some parents to delay their plans to return to the labor force.”

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