Career Advice

JobGet’s September Unemployment Update

By: Holly Monti
Oct 15, 2021 • 4 min read

JobGet’s September Unemployment Update

The latest jobs report from the Labor Department shows that the COVID-19 Delta variant continues to impede recovery. After job growth slowed dramatically in August, the economy again added far fewer jobs than previous months and much less than what was predicted. However, the unemployment rate dropped to a new pandemic low in September, and with the worst of the Delta wave now behind us, there is good reason to believe that the job market recovery should pick up steam in the coming months.

Summary

September proved to be another disappointing month for the job market recovery. As COVID infections surged across the country due to the Delta wave, the economy added just 194,000 jobs, far below the predicted 500,000 or more, and just a fraction of the 1.1 million jobs that were added in July before the Delta variant caused a spike in COVID cases.

However, not all news in the report was bad. The unemployment rate dropped to a new pandemic low of 4.8%, and wages continued to rise. September’s job growth was dragged down by the loss of 144,000 jobs in local public schools.  Typically, hiring in public schools bolsters September’s numbers, but this year’s September decline in school hiring is likely due to several factors, including challenges to seasonally adjusting the data and difficulty in filling certain school positions, such as bus drivers, cafeteria workers, and substitute teachers.

While employment in the hard-hit Leisure and Hospitality sector picked up from August, the sector added just 74,000 jobs, a far cry from the job growth seen a few months ago. Average wages—both within Leisure and Hospitality and across all industries—continued to increase. Overall, average hourly wages are now 4.6% higher than a year ago. However, prices continued to rise as well; the Consumer Price Index (CPI) is now 5.4% higher than last September.

Widespread reports of difficulty hiring indicate that the labor shortage continues to hinder recovery. Job openings are still higher than the number of unemployed workers and quit rates reached an all-time high. While most demographic groups saw drops in their unemployment rates, teen unemployment ticked upwards again.

JobGet Unemployment Report Sept 2.0-converted (1)

Unemployment Breakdown

The total number of unemployed individuals and the number of permanent job losses both fell in September. At the same time, the number of temporary layoffs changed little from August. The number of short-term unemployed workers increased while the number of workers unemployed for 5-14 weeks, 15-26 weeks and 27 weeks or more (long-term unemployed) fell. Median unemployment duration fell for the third straight month, from 14.7 weeks in August to 13.3 weeks in September.

Overall, the unemployment rate dropped from 5.2% to 4.8%. Most demographic groups saw at least modest declines in their unemployment rates, but the teen unemployment rate ticked up slightly, from 11.2% in August to 11.5% in September. The unemployment rate for men dropped from 5.1% to 4.7% while women’s unemployment rate fell to 4.2%, down from 4.8% in August. The White unemployment rate declined from 4.5% to 4.2% and the Black unemployment rate dropped by nearly a full percentage point, from 8.8% in August to 7.9% in September. Asians and Hispanics saw more modest declines in their unemployment rates; the Asian unemployment rate dropped to 4.2% from 4.6% in August while the Hispanic unemployment rate ticked down from 6.4% to 6.3%. Labor force participation dropped by 0.1 percentage point.

When broken down by occupation, the recovery continues, albeit unevenly. In comparison to September 2020, the unemployment rate broken down by occupation is lower for almost every occupation category. Among service, sales & office, natural resources, construction and maintenance, and transportation and material moving occupations, the unemployment rates have all declined significantly from a year ago, ranging from 2.3 to 5.6 percentage points lower. With the exception of natural resources, construction, and maintenance, these unemployment rates also declined from August.

man preparing beverage drink in bar

Industry and Earnings

After no change from July to August, employment in the Leisure and Hospitality industry increased by a modest 74,000 jobs in September. This is far less than the job growth the industry saw several months ago, but it is welcome news considering the impact that the Delta variant has had on industries reliant on face-to-face interactions. Most of the job growth (58%) is due to gains in the Arts, Entertainment, and Recreation sub-sector. Employment in Retail trade, which has also suffered in the Delta wave, increased as well—by 56,000 jobs.

Other industries, including Professional and Business Services, Transportation and Warehousing, Information, and Manufacturing, also saw employment gains. Employment in Professional and Business Services went up by 60,000 jobs, and Transportation and Warehousing gained 47,300 jobs. Due to a large loss of local public school jobs, government employment declined by 123,000.

As labor shortages continue to put upward pressure on wages, average hourly wages increased for the 6th straight month and by the largest amount since April.  September’s monthly wage growth of 0.6% pushed the year-over-year growth to 4.6%. Wage growth in the Leisure and Hospitality industry continues, but it has slowed down. Leisure and Hospitality wages increased by $0.10, a 0.53% increase from August. Average hourly wages for Education and Health Service workers rose by $0.44, a 1.47% increase from last month.

Employment Levels and Labor Shortage

September’s tepid job growth of 194,000 workers was accompanied by a drop in the labor force of 183,000 workers. The decrease in the labor force partly explains the drop in the unemployment rate. The labor force participation rate dropped by 0.1 percentage point, and the prime-age worker employment rate was unchanged.

In August, there were 10.4 million job openings and 7.7 million unemployed people. While there are still more open jobs than workers available, job openings actually fell for the first time this year with a notable decline in leisure and hospitality job openings. However, businesses across the country continue to struggle to hire workers.

The pandemic has caused many workers to rethink their priorities and career paths. This phenomenon combined with rising wages and plenty of available jobs has led to record-high quit rates. In August the quit rate rose to a new high of 2.9%, for a total of 4.3 million. As the Delta variant caused a surge in COVID infections, quits jumped in the Leisure and Hospitality industry, which experienced a quit rate of 6.4%. Quit rates typically skew high in Leisure and Hospitality, but the current quit rate is exceptionally high.

Inflation

Consumer prices, as measured by the Consumer Price Index (CPI), climbed by 0.4% in September, or a 5.4% increase from a year ago. Food and energy price increases can explain much of the increase—excluding food and energy, the gain was just 0.2% on a monthly basis or 4% higher than a year ago. Food at home prices rose 1.2% for the month.

In addition to higher food and energy prices, higher prices for cars, hotel rooms, and clothing, among other goods and services, are contributing to the CPI increase. Supply chain disruptions are fueling much of the pressure on prices. And while wages gains have been good, they are not keeping pace with price increases.

woman in black long sleeve shirt sitting on beige chair

Key Takeaways

The COVID-19 Delta variant continued to leave its mark on the U.S. job market recovery. The economy added only 194,000 jobs, a fraction of the job growth from late Spring and early Summer. At the same time, the unemployment rate fell to a new pandemic low of 4.8% due to a combination of unemployed workers finding jobs and people leaving the labor force. As businesses continue to face hiring challenges, wages rose for the 6th straight month. In the coming months, we expect the recovery to get back on track as the Delta variant surge eases.

JobGet is proud to help hopeful job seekers land great positions on our platform. It is important that both candidates and employers have their needs met as we continue to navigate the pandemic job market.

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