Job gains are waning, a blow to recovery
Six months after the coronavirus pandemic tore a hole in the U. S. economy, the once- promising recovery is stalling, leaving millions out of work and threatening to push millions more — particularly women — out of the labor force entirely.
The latest evidence came Friday, when the Labor Department reported that employers added 661,000 jobs in September, far fewer than forecasters expected.
It was the third straight month of slowing job growth, a worrying trend, given the scale of the challenge ahead. The economy has nearly 11 million fewer jobs than it did before the pandemic, a bigger loss than the 8.7 million at the depth of the recession a decade ago.
Economists said the report underscored the need for more federal help. “It’s disturbing that we’re seeing such a dramatic slowdown in employment gains as we head into the fall,” said Diane Swonk, chief economist for accounting firm Grant Thornton. “This is a red flag. We need aid now.”
The September slowdown was partly a result of public- sector job losses, particularly in school districts, where payrolls fell by more than 200,000. Economists said some of those jobs would come back if more schools opened for in- person instruction. But further cuts could be looming as state and local governments reel from a collapse in tax revenues.
The unemployment rate fell to 7.9%, down from a record high of nearly 15% in April. But even that good news carried a caveat: Nearly 700,000 people left the labor force, meaning they no longer counted as unemployed. And a rising share of the unemployed report that their job losses are permanent rather than furloughs.
The report was the last set of monthly jobs numbers — and one of the last major pieces of economic data — before the presidential election Nov. 3.
Trump administration officials put a positive spin on the report. Larry Kudlow, director of the National Economic Council, said on the Fox Business Network that analysts were misreading the numbers. “I think they are better than some people think,” he said. “The overall economy is looking good.”
It isn’t clear how much the economic data will matter to an election race upended by the news that President Donald Trump
tested positive for the coronavirus. But economists said recent data carried a clear message: Without a phase four spending package in Congress, the slowdown will only get worse.
“Everything depends on phase four and whether we get that or not,” said Aneta Markowska, chief economist for investment bank Jefferies. “There’s no middle ground.”
Prospects for a deal improved this week after seeming all but dead in September. Speaker Nancy Pelosi on Friday floated the possibility that Trump’s coronavirus diagnosis could make an agreement more likely.
“This kind of changes the dynamic because here they see the reality of what we have been saying all along: This is a vicious virus,” Pelosi said on MSNBC.
For small businesses in the industries hit hardest by the pandemic, the lack of federal assistance is an existential threat — and time is running out.
When the pandemic shut down movie theaters last spring, Cleveland Cinemas was able to stay afloat in part thanks to a loan under the Paycheck Protection Program.
But that money is long gone. So are the cash savings that the company, which operated five theaters in the Cleveland area, had set aside to pay for new seating to help compete with big multiplexes.
Jon Forman, who has owned Cleveland Cinemas since 1977, isn’t sure what to do next. He has reopened only two of his theaters, and neither is attracting enough patrons to break even, even with fewer than 10 employees, down from 85 before the pandemic.
Many Americans remain wary of sitting indoors with strangers for two or three hours. And studios, hesitant to distribute bigbudget movies when few people will pay to see them, have been delaying major releases until 2021.
Big chains may have the resources to wait for better days, but Forman isn’t sure he does. He has closed one theater permanently. Two others have been dark since March, and he is thinking about shutting the two reopened ones until demand picks up.
“We’re on a slope going down,” he said. “Without some sort of support, businesses are not going to survive.”
Stories such as Forman’s reflect the mounting risks that as the crisis drags on, it will do lasting damage to the economy.
When unemployment spiked
in March and April, most of the job losses were temporary layoffs or furloughs. But that is beginning to change. The number of people reporting they had been permanently let go rose to 3.8 million in September, nearly twice as many as at the height of the pandemic in April.
Prospects are particularly grim for those who lost their jobs in the first weeks of the crisis. More than 2.4 million people have been out of work for 27 weeks or more, the formal — if somewhat arbitrary — threshold for long- term joblessness.
The September data carried particularly grim news about the pandemic’s impact on women. Initial job losses were concentrated among employers with heavily female workforces, like the hospitality and retail industries. While employment in those businesses has begun to bounce back, many women have been unable to return to work because they are disproportionately shouldering the burden of having children home from school.
The number of women working fell by 143,000 in September, and the share of women working or actively looking for work — a measure known as the labor force participation rate — dropped to 55.6% from 56.1%. Apart from April and May 2020, that is the lowest reading for women’s labor force participation since 1987.
Economists worry that the unexpected pause in their careers could prove to be a long- term setback for many women.
“We know that women leaving the workforce to care for children for a while has lasting effects on their earnings, their seniority and their climb up the ladder,” said Julia Pollak, a labor economist with the career site ZipRecruiter. “Career interruptions have a huge effect.”