Today’s employment report from the Bureau of Labor Statistics has the delta variant written all over it. It is clear that the recent surge in COVID-19 cases is a strong headwind to the labor market. The good news is that the wind was not so strong that it stopped all progress. The underlying momentum is still there. We just have to see if we can keep up the pace until this surge is behind us.
The industry breakdown in employment growth shows clear signs that the increased COVID-19 spread is behind this relatively weak number. Employment in the most COVID-sensitive industries dropped in August while the rest of the economy merely slowed down. Employment in leisure and hospitality is still down 10% from pre-pandemic levels and the sector added no new jobs. The drop of over 42,000 jobs in restaurant and food services is particularly concerning.
Yet, the labor market is still recovering. Employment did grow in August as the share of the prime-age population (ages 25 -54) moved upward. In addition, transportation and warehousing employment is now above pre-pandemic levels. This sector has been quite resistant to the economic fallout of the virus.
The coronavirus remains a threat to a strong and sustained labor market recovery. A fair amount of progress has been made, but the economy will not get a sure footing until the pandemic is successfully dealt with. We have 5.3 million fewer jobs than before the pandemic and we will not get back there anytime soon until we have more certainty about the public health situation.
