The August 2021 jobs report released by the U.S. Bureau of Labor Statistics this morning shows that the job market continued to make progress, despite a major Covid surge attributed to the Delta variant. Cases rose more than four-fold between July and August, with hospitalizations reaching record highs in many states. And yet, rather than stalling or going into reverse, the labor market recovery continued, albeit at a slower pace.
In response to Covid outbreaks, daily Covid vaccine doses administered have nearly doubled—a sign that people are increasingly dealing with the pandemic by getting vaccinated and masking up, rather than by sheltering in place or cancelling their plans.
Job gains and losses
The economy added 235k jobs in August, and the totals for June and July were revised upward by a combined 134k, with the July gain now coming in at over 1 million. The majority of industries contributed job gains, not losses. (The diffusion index, which measures the breadth of job gains or losses, was well above 50 at 61.7). And the losses were relatively small and fairly concentrated in the most Covid-sensitive industries, such as restaurants (-42k) and retail (-29k).
Payrolls continued to swell in business and professional services (+74k); transportation and warehousing (+53k); manufacturing (+37k); arts, entertainment, and recreation (+36k). And working hours held steady.
Unemployment and labor force participation
Encouragingly, there was no increase in temporary layoffs overall or in the number of people working part-time for economic reasons, despite the job losses in retail and restaurants. On the contrary, the unemployment rate continued to decline and there were many small improvements in other key labor market indicators.
For example, the number of discouraged workers fell, the prime-age employment-to-population ratio rose, and the median duration of unemployment fell to 14.7 weeks as the number of long-term unemployed fell by almost a quarter of a million.
Wages
Wage growth remained robust. Hourly earnings have risen from less than $15 before pandemic to $16.60 for production and nonsupervisory workers in leisure and hospitality, and from less than $17 to $18.70 for those in retail. Rising wages signal continued labor market tightness and strong employer demand for labor.
Remote work
After declining steadily from 23.2% in January, the share of workers performing their jobs remotely due to the pandemic held steady at 13.4% in August—the likely effect of businesses delaying their return-to-office plans amid the Delta surge. Industries where a large share of the jobs can be done remotely generally added jobs. The delay in office reopenings will likely forestall the complete recovery of restaurants, nail salons, and dry cleaners in downtown areas, but fuel further growth in transportation and warehousing employment.
What to watch in next month’s report
It is too soon to see the effect of schools reopening in person in the August report. But associated job gains and improvements in labor force participation will show up in the September report and are likely to be large, now that the vast majority of schools and universities are opening in person and bringing back positions that fell off payrolls in March or April, 2020.
By ZipRecruiter’s count, the number of unique active online job postings nationwide rose 13% between July and August.1 Increases in job postings one month tend to predict changes in payrolls the following month, so the steep increase in postings suggests that the labor market recovery could ramp back up again in September.
1 Broad insights into the labor market from the millions of total jobs in our marketplace, including jobs from employers which are not Paid Employers, should not be taken as an indication of ZipRecruiter’s future financial performance.
