More jobs come back in August, but more jobs are also gone for good

Many were looking to today’s August US jobs report to see if the pace of rehirings was slowing as Summer wound down, or if jobs were still being regained at a brisk pace and there still was a possibility that our recovery was “V” shaped.

Well, the numbers indicate things were still recovering, especially when it came to the unemployment rate, which fell below 10% (and 9%) for the first time since COVID broke out.

In August, the unemployment rate declined by 1.8 percentage points to 8.4 percent, and the number of unemployed persons fell by 2.8 million to 13.6 million. Both measures have declined for 4 consecutive months but are higher than in February, by 4.9 percentage points and 7.8 million, respectively….

Total nonfarm payroll employment rose by 1.4 million in August, following increases of larger magnitude in the prior 3 months. In August, nonfarm employment was below its February level by 11.5 million, or 7.6 percent. Government employment rose in August, largely reflecting temporary hiring for the 2020 Census. Notable job gains also occurred in retail trade, in professional and business services, in leisure and hospitality, and in education and health services.

That’s better than I was thinking, especially with unemployment claims staying high and few areas left to reopen. And the drop in unemployment was especially impressive, as it happened for the “good reason” – more people entering the work force and finding jobs.

Household survey, August 2020
Labor Force +968,000
Employment +3,756,000
Unemployment -2,788,000

Sure, we still have 7.55 million more people counting as “unemployed” than we did in August 2019, but it’s progress, right? And the U-6 measure that includes people working part-time for economic reasons also had a good decline, down 2.3% to 14.2%.

The payrolls number was also solid (+1,371,000), although somewhat uneven as the big gains were only in a few sectors, led by Government with 344,000 (mostly Census) jobs.

Notable: 17% of the 1.4 million jobs added back in August came from 2020 Census workers. These jobs are temporary.

Census workers: +238,000
Retail: +249,000
Biz: +197,000 --> More than 50% were temp help jobs
Hospitality: +174,000
Health care: +75,000
Manufacturing: +29,000

— Heather Long (@byHeatherLong) September 4, 2020

The retail jobs number surprised me. 116,400 of that is big-box and department stores, but are there really a large number of brick-and-mortar stores reopening and hiring people back? I can’t think those are sticking around for a while. Likewise, temporary help services added 106,700 jobs last month. Not a sustainable situation there.

Most of the gains in hospitality jobs were in bars and restaurants (+133,600), which was hit hardest by the COVID-induced shutdowns. However, that increase was much less than what we saw in the previous 3 months, and that part of the econokmy continues to be significantly depressed, with 21.3% of leisure and hospitality workers still listed as unemployed in August, and 2.5 million jobs in bars and restaurants yet to come back.

We also need to remember that while gains in jobs are a lot better than losses, we still haven’t gained back half of what was lost in March and April.

And that “jobs hole” seems to be becoming more established, indicating the structural changes in jobs that might be coming for the rest of 2020 and possibly beyond. It’s not just food services that have much fewer jobs than before COVID broke out in March, and some sectors that lost jobs have barely gained anything back this Summer.

Perhaps most concerning is that long-term unemployment is rising, as are permanent jobs losses, as business owners realize they aren't going to get enough business to hire back people they furloughed when COVID first broke out.

You'll note that by the time we get to October, we end up more than 27 weeks after the first outbreaks of COVID in March, so we can expect that orange line of +26 weeks to start jumping around then.

That being said, some jobs were still coming back in August, making for a total 4-month gain of 10.6 million jobs. But with new unemployment claims continuing to come in at over 800,000 a week (raw total), and fewer people being called back to their old jobs, I have to wonder how much (if any) of the 11.55 million that still haven’t come back will be restored in the rest of 2020.