September employment report shows again the limited role of unemployment benefits

The September jobs report released on Friday offered even more evidence that pandemic-era unemployment benefits did not significantly dampen the labor market.

Job growth – 194,000 new payrolls – was well below expectations in September and slowed compared to previous months. The labor force (a measure that counts workers and those actively looking for work) declined by 183,000 from August, according to the Bureau of Labor Statistics.

The data offers the first glimpse into the U.S. labor market since the end of enhanced federal unemployment benefits on Labor Day. The September report suggests that many workers have not found new jobs or left the sideline to look for work, despite those benefits expiring.

This Labor Day “cliff” affected an estimated 8.5 million Americans, according to Labor Department data. More than 2 million others have obtained a reduction of $ 300 in their weekly benefits.

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Some economists and policymakers believed federal benefits were holding back the recovery. It is becoming increasingly clear that other factors, in particular the Covid Delta wave, have played a larger role in limiting economic activity, according to labor experts.

“All the evidence points to a pandemic [unemployment benefits] not being the main factor, ”said Nick Bunker, director of economic research for North America at the Indeed Hiring Lab. “The best guess at the moment is that this is the pandemic itself.

“This is still a report on jobs in the delta wave era,” Bunker added.

The September jobs report is the latest evidence of the moderate role played by improved federal benefits. These benefits included a weekly supplement of $ 300 and assistance for groups that generally do not qualify for state assistance, such as concert workers and the long-term unemployed.

Twenty-six state governors, all but one Republican, decided to withdraw from programs early, in June or July, to get people back into the workforce.

However, economic analyzes found that the withdrawals did not trigger the expected jobs rush. Some have even found negative effects.

“In fact, we are finding that the loss of benefits is associated with a slight decline in job growth, income growth and labor force participation,” wrote Peter McCrory, economist at JPMorgan Chase. Bank, in a research note last month.

The Labor Day deadline hit more people than the June-July batch, as it included high-earning states like California and New York. Some economists expected there to be a more pronounced impact after Labor Day, which has yet to materialize.

While any positive impacts on job growth have been “relatively muted” so far, that could change later this year and as households use up any accumulated savings, according to Daniel Zhao, senior economist at the Glassdoor job site.

“Ultimately, the September report will not be the last word in the debate on the impact of [unemployment insurance] benefits, ”Zhao said.

That said, the jobs report was widely viewed as a disappointment on Friday morning after strong job growth in the spring and early summer.

Private sector employment growth averaged 488,000 over the three-month period to September. This is a significant slowdown from recent months – employment growth averaged 652,000 and 726,000 for the three months ended August and July, respectively.

“As shocking as today’s employment numbers are, the decline in the workforce is even more troubling,” said Neil Bradley, executive vice president and director of policy at the Chamber of Commerce the United States. “We are in the midst of a labor shortage crisis and the number of potential workers is shrinking.”