Is the U.S. headed for a hiring slowdown? Analyzing the sobering new jobs report

The net gain of just 235,000 jobs in the U.S. last month was a huge drop from summer's gains. It could be signaling a hiring slowdown — one that's worse than had been expected. Pandemic unemployment benefits for more than 7 million people are also due to expire on Monday. William Brangham is joined by Catherine Rampell, special correspondent for the NewsHour and columnist for The Washington Post.

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  • Judy Woodruff:

    Compared with the jobs reports of the past few months, when many parts of the country seemed to be reopening, the unemployment report for August was expected to be significantly more modest.

    But, as William Brangham tells us, the report that came out today was a sobering splash of cold water about the state of the economy and the ongoing impact of the pandemic.

  • William Brangham:

    Judy, that net gain of just 235,000 jobs last month was a huge drop from this summer's earlier gains, and it could be signaling a hiring slowdown and one that's worse than had been expected.

    This also comes at a particularly tricky moment. That's because those pandemic unemployment benefits, the ones that have cushioned the blow of the last year-and-a-half, are going to expire on Monday. More than seven million people will see those benefits disappear on Labor Day.

    To help us take stock of this all, I'm joined by Catherine Rampell. She's a special correspondent for the "NewsHour" and a columnist for The Washington Post.

    Catherine, great to have you back on the "NewsHour."

    July, we saw almost a million jobs gained, and now we're down to just barely a quarter of that. Do you point the finger and the blame squarely at the virus for this?

  • Catherine Rampell:

    I think Delta variant's fingerprints are over this report, particularly if you look at what industries most missed expectations.

    So, for example, you had the food services and drinking establishments sector. That is restaurants and bars, a fancy way to say restaurants and bars. They actually lost jobs in August, after having averaged about 200,000 jobs per month over the previous six months.

    And that makes sense, right? If, in fact, it's riskier to go out, to go to a bar, to go to a restaurant to hang out with your friends outside your home, people aren't going to do it. So you have those kinds of employers dropping people from their payrolls.

    And you see some similar effects through some other sectors that have been sensitive to the pandemic. The health care industry, for example, lost jobs. That might seem a little bit counterintuitive. But it makes sense when you think about the fact that elective procedures have been put off, for example. Nurses, doctors, other health care workers are burnt out and quitting.

    So, throughout this report, there's been a fair amount of negative news. And it all seems, or it largely seems, in any event, due to COVID, and the rise of infections.

  • William Brangham:

    : And did those rise in infections and hospitalizations track with the number loss? Like, can you really plot it on a graph and say cause and effect?

  • Catherine Rampell:

    It certainly looks that way, although, if you look at the scale of the job losses earlier in the pandemic, they were much larger relative to the number of deaths we were getting then, for example.

    So I guess, in some respects, it's better that we have not had quite the same negative impact on the economy this time around that we did early in the pandemic. On the other hand, of course, that means that people are engaging in more of their regular day-to-day economic activities that could be high-risk, particularly if they are unvaccinated.

    But, yes, if you look at the rise in infections, the rise in hospitalizations, the rise in deaths, it does seem to track pretty closely, at least in terms of direction, with the fact that there's been a slowdown in COVID-sensitive industries.

  • William Brangham:

    As I mentioned, come Monday, seven million people are going to lose their unemployment insurance benefits.

    And I know there is reportedly some internal debate within the administration as to whether or not this is the right time for those benefits to go away. Do you think this jobs report changes that decision?

  • Catherine Rampell:

    I think it does complicate it.

    A few months ago, we were hearing pretty widespread arguments for the fact that these expanded unemployment benefits might be keeping people from taking the available jobs in their area. And there have been a huge number of job vacancies, for that matter, that have been going on filled.

    And I think it's reasonable to think that, for some workers, yes, it could be the case that, if their outside option, employment benefits, allows them to continue paying the bills, they might hold off on accepting a job that's not suitable for them or that doesn't meet their needs, or what have you.

    There are a lot of other factors, too, that are delaying people's return to jobs into the work force in general, things like lack of access to child care, lack of access to transportation, and, of course, rising COVID risk at a lot of the jobs that are available.

    So, I think it complicates the picture a little bit if, in fact, fewer jobs are available or, at the very least, the jobs that have been going begging may no longer be there anymore, because there are consumers, right? There are consumers who want to go out to restaurants and bars, and to other kinds of activities that are higher risk.

    The real question going forward is, if these seven million-odd people lose their unemployment benefits, what does that mean for their families? And what does that mean for the overall economy? If, in fact, the benefits are keeping them afloat, but not majorly weighing on their decision to take a job or to not take a job, what could happen is their spending power just goes down.

    And if their spending power goes down, that means that they have less money available to spend in their local economy, which could in turn have these knock-on effects that make it harder for local employers to hire.

    So, it's a little hard to disentangle what the macro effects of this will be, but it will certainly cause a lot of hardship for many families. And I should mention, by the way, that there have been attempts to look at whether the states that already ended these unemployment — these expanded federal employment unemployment benefits early, whether they have had any appreciably higher job growth than the states that decided to keep them around through next week in any event.

    And, so far, it seems like there's not much of an effect either way.

  • William Brangham:

    All right, Catherine Rampell, special correspondent for the "NewsHour" and at The Washington Post, thank you so much.

  • Catherine Rampell:

    Thank you.

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