Jobs: Delta and Labor Shortages Weigh on Gains

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A lower-than-expected September jobs gain of 194,000 shows the impact of still-high COVID-19 infections and labor shortages. The biggest change was a drop of 180,000 jobs in education roles, the opposite of what would have been expected in a typical September. It is likely that COVID is responsible, both due to reduced demand for school employees, and due to some people not wanting to take jobs mixing with unvaccinated children right now. This is expected to improve as the infection rate drops and if, as expected, vaccinations of children start to ramp up next month.

The lackluster September report is not likely to slow the Federal Reserve’s plans to begin cutting back on its purchases of government and mortgage-backed securities before the end of the year.

The unemployment rate fell to 4.8%. However, part of the decline was likely the result of workers dropping out of the labor force after losing their unemployment benefits, and thus no longer being counted when the unemployment rate is calculated. Next year, the rate should near its pre-pandemic level of 3.5%. But with total employment is still 5 million below its prepandemic level, there is a strong possibility that labor shortages will prevent the total number of jobs getting back to its prior peak before the unemployment rate stops falling.

The share of teleworking employees was 13.2% in September, down from 18.3% in April. The number of unemployed people who were prevented from looking for work because of the pandemic was 1.6 million, similar to August’s level.