Jobs Report Delivers Less Than Half of What Economists Predicted, But Something Big Is Happening Next Week

By Amy Gamm September 4, 2021 at 8:21am

The U.S. gained 235,000 jobs in August, dropping unemployment to 5.2 percent, according to data the Department of Labor released Friday.

However, the numbers only represent one-third of the 720,000 jobs that economists projected for the month, The Wall Street Journal reported.

As the federal pandemic unemployment supplement is set to stop on Sept. 6, approximately 8.4 million people are jobless, according to the latest DOL Bureau of Labor Statistics news release.

The $300 weekly unemployment supplements resulted in a tremendous boost.

According to a JPMorgan Chase & Co. Institute study, 48 percent of people receiving benefits made as much or even more money on unemployment than they did when they were working pre-pandemic. When the supplement was $600 each week — that benefit ending in July 2020 — 76 percent either broke even or pocketed more.

Business Insider reported last month that “employers’ demand for workers is incredibly strong.” A U.S. Bureau of Labor Statistics report announced a job opening surge at June’s end, reaching a record high of 10 million. New hires also increased, but not enough to fill the vacancies.

Many businesses, struggling to hire enough help to stay afloat, hope the end of the federally funded unemployment supplements will change all that.

As U.S. unemployment benefits end, firms hope for a wave of applicants https://t.co/xlXxT0P2pJ pic.twitter.com/E252kiRJWG

— Reuters (@Reuters) September 3, 2021

Many Americans believe that the policy of increasing unemployment benefits and extending the time to get them disincentivized people from seeking work. Republican Sen. Ben Sasse of Nebraska summed up this sentiment in a statement he made back in May.

“This tragedy is what happens when Washington know-it-alls decide to pretend they’re generous by paying more for unemployment than for work,” he said.

In June, 26 states — all Republican-governed except Louisiana — withdrew the federal assistance ahead of the official Sept. 6 expiration date. These states served to test the hypothesis that federally funded unemployment supplements only end up paying people to stay home.

However, some economists and other experts provided dissenting opinions.

Analysis from workforce management company Ultimate Kronos Group suggested that jobs grew in those 26 states at only half the rate as states that continued the benefit, especially among hourly wage earners. UKG cited other reasons that “play a larger role than benefits in a lack of job searches,” according to CNBC.

Experts say COVID concerns are among the reasons. The Centers for Disease Control and Prevention reported a 4.9 increase in daily new COVID-19 cases last week with cases totaling 153,246 nationwide on a seven-day moving average. The CDC noted over 99 percent of those were attributed to the delta variant.

Along with an increase in COVID cases comes more anxiety about going back to work, both for employers and potential employees. The recent BLS news release reported that in August, 1.5 million people “were prevented from looking for work due to the pandemic.” The agency did not specify what pandemic-related factors prevented people from searching for jobs.

Some companies haven’t even reopened yet. The New York Times recently reported many companies that were set to reopen in September and October are reconsidering. People can’t take jobs that don’t exist.

Do you think people are going to return to work once they lose their benefits next week?

Some experts say another deterrent for people seeking employment is school and child care closures due to the virus. If parents don’t have a place to send their kids while they are working, they can’t work.

That idea, however, has been debunked. Jason Furman, a Harvard professor who chaired the Council of Economic Advisers in the Obama administration, recently co-authored an analysis to determine how child care challenges affected employment rates.

“This analysis demonstrates that despite the widespread challenges that parents across the country have faced from ongoing school and daycare closures, excess employment declines among parents of young children are not a driver of continuing low employment levels,” the study found.

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