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August's jobs numbers were bad. September was even worse, but there's room for hope

A woman walks by a 'Now Hiring' sign outside a store in Arlington, Va., on Aug. 16. The labor market is expected to have improved last month after disappointing growth in August.
A woman walks by a 'Now Hiring' sign outside a store in Arlington, Va., on Aug. 16. The labor market is expected to have improved last month after disappointing growth in August.

A few months ago, forecasters thought September would be a banner month for hiring.

Schools would re-open, freeing parents to go back to work. Supplemental unemployment benefits that some employers blamed for keeping workers on the sidelines would expire. Most importantly, widespread vaccinations would put the pandemic in the rear-view mirror.

It hasn't exactly worked out that way – although there's (tentative) room for hope.

September's employment report — which the Labor Department will release on Friday — is expected to show improvement from August, but not the stellar job growth that was hoped for at the beginning of summer.

"It's just a bumpy recovery," says Nela Richardson, chief economist at the payroll processing firm ADP. "And it's a recovery that's still linked to the pandemic and the Delta variant."

Employers added just 235,000 jobs in August, compared to well over a million jobs in July. Restaurants and retail shops actually cut workers that month, as fear of the virus discouraged customers from eating out and shopping.

However, since then, the health outlook has improved. New infections, hospitalizations, and deaths have all fallen in recent weeks. ADP's model shows private employers added 568,000 jobs in September, with nearly 40% of that growth coming in the sensitive hospitality sector.

"This is due to the massive restaurant and bar industry, which will continue providing a significant tailwind to growth," Richardson says.

Employers also hope that the end of the emergency pandemic programs nationwide in early September will spur more people to return to work.

More than seven million people dropped off the unemployment rolls last month and there have been early signs that some of them are going back to work.

"We saw it," says Mike Parra, Americas region CEO for the delivery company DHL Express. "The moment [benefits] stopped in Ohio and in Kentucky, we saw a mad dash into the buildings."

Parra has been trying since June to staff up for the busy holiday season.

"It's not been easy," he says. "It's definitely been different than in the past as a result of, first and foremost, the pandemic in itself."

Students and parents arrive masked for the first day of the school year at Grant Elementary School in Los Angeles on Aug. 16. The reopening of schools has raised hope some parents may return to the labor force.
Robyn Beck / AFP via Getty Images
Students and parents arrive masked for the first day of the school year at Grant Elementary School in Los Angeles on Aug. 16. The reopening of schools has raised hope some parents may return to the labor force.

Schools reopen and that may be good for employers

The re-opening of most schools this fall is also raising some hope. While there may be less certainty about whether they can stay open, it's providing an opening for more parents to go back to work.

Census surveys show the number of people who aren't working because they have kids at home has dropped from nearly 8 million in mid-summer to about 5 million today.

Presumably, a lot of parents who left the workforce during the pandemic will go back to work once their concerns about child care and the virus are addressed.

One of the biggest unknowns, however, is whether older people who dropped out will return to work.

"It does seem that a lot of people who are retirement age are opting out rather than staying in the workforce, which is a big, big change from pre-pandemic, when people worked well into their 60s and well after 65," said Tim Fiore, who conducts a monthly survey of factory managers for the Institute for Supply Management.

Federal Reserve Chairman Jerome Powell, who's 68, is not convinced that all those older workers have drawn their last paycheck. As the public health outlook and the job market improve, Powell hopes at least some experienced hands decide to come back to work.

"The lore is that people don't come out of retirement," Powell said last week during a Congressional hearing. "Except I would say, all during the last few years of the very long expansion that ended with the pandemic, we were constantly surprised to the upside on participation, including older people staying in the workforce longer."

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