More jobs are ‘missing’ than in the worst postwar recession

First the good news:

The Bureau of Labor Statistics just released its last pre-election jobs report, and the economy is still healing — despite a resurgence in coronavirus infections this summer and despite Congress failing to pass another round of much-needed stimulus. September marked the fifth consecutive month of job growth.

Here’s the bad news: The nation’s payrolls are still down 10.7 million jobs, or about 7%, since their peak in February, when the recession began. That’s enormous. In fact, a higher net share of jobs is still “missing” today, relative to pre-recession times, than was the case even at the worst period of any prior postwar downturn.

Another measure of labor market health, the unemployment rate, tells a barely more favorable story.

The unemployment rate in September was 7.9%. This is lower than had been forecast and down from earlier this year.

The unemployment rate peaked at 14.7% — though that official figure understated the damage due to measurement issues. Unfortunately, unemployment fell in September largely for the “wrong” reasons: because people dropped out of the labor force and stopped being formally counted as employed.

The 7.9% rate is also pretty close to the average peak unemployment rate of all postwar recessions.

An unemployment rate of 7.9% is also the highest for any president heading into a reelection contest in modern economic history. Several incumbents headed into their elections with rates above 7% (Jimmy Carter, Ronald Reagan, George H.W. Bush), but none with a rate this high.

Some other observations about the jobs report:

Job growth has undoubtedly slowed in recent months. In June, the nation’s employers added an impressive 4.8 million jobs; last month, they added just 661,000.

This slowdown calls into question persistent characterizations from this administration that the recovery is “V-shaped.”

Yes, we initially had a sharp bounce-back. Lately, that bounce has slowed.

Some other signs suggest the recovery might slow further, including the fact that a rising share of workers who are unemployed are on permanent, rather than temporary, layoff. Several large employers, including Disney, Goldman Sachs, Allstate and airlines, recently announced more downsizing.

Labor-force participation is also falling, especially among prime-working-age women, driven in part by the fact that women are more likely to be primary caregivers, and in many parts of the country children are not yet back at school in person.

Government payrolls also took a massive hit, thanks mainly to a decline in state and local government education employment. They shed 231,000 and 49,000 jobs, respectively. If more schools return to inperson classes, some of those jobs may be recovered. However, budget crunches caused by the pandemic recession may limit how many people are rehired.

Which brings us to the main reason for pessimism: stalled congressional talks on coronavirus relief.

As these and other measures show, Americans are still struggling and stressed. A recent Census Bureau survey found that about 1 in 10 adults was in a household where there was either sometimes or often not enough to eat in the previous seven days.

The pain is most concentrated among lower-wage, service-sector and blue-collar workers; higherwage, college-educated, whitecollar workers who can continue working from home are mostly doing fine.

White Americans have also recovered about 60% of their lost jobs, whereas Black Americans have recovered only about a third.

Perhaps because there are signs of a recovery — uneven though it may be — policymakers have not seen fit to pass more fiscal relief either to mitigate the virus or its economic consequences.

Federal Reserve Chair Jerome Powell has been pleading for Congress to inject more stimulus, and the Democratic-controlled House has already passed multiple bills to do so. Republicans in the Senate and the White House appear to still be standing in the way.

Without more aid coming, and with the virus still not under control, a sputtering recovery may lapse into full-on decline again.