The hardest-hit sectors of hospitality and retail trade are now among the leaders in job creation, but total employment is still 10 million below February highs.
By Manuel Gutierrez, Consulting Economist to NKBA
The labor market continues to recover from the huge losses caused by the pandemic shutdown, although the figures are still far below pre-pandemic levels. The number of jobs rose by 638,000 in October, 34,000 fewer than in September, when 672,000 jobs were added. Total employment now stands at 142.4 million, 10 million below the 152.5 million total in February.
The employment picture in October was generally rosier across a number of criteria. For instance, the employment-to-population ratio rose by nearly a percentage point to 57.4%. This is 6.1 percentage points higher than the low reached in April.
The unemployment rate dropped by another percentage point, to 6.9%. This compares with April’s peak unemployment rate of 14.7%.
Also potentially positive, if the reduction of 268,000 government jobs last month is excluded from the totals, some of which, like Census jobs, were temporary to begin with, employment in the private sector rose by 906,000. The decline in government jobs was witnessed across the three levels of government: federal, state and local.
Half the government job drop was from the federal side, which eliminated 138,000 temporary jobs that had been created for 2020 Census canvassing. Note that although nearly 1 in 7 U.S. jobs (15%) originate from government, only 2% of them are from the federal level.
Local governments are the largest employers among governments. They account for 10% of jobs. They shed 65,000 jobs in October, following a larger 108,000 job decline the previous month. State and local governments have seen their revenues fall during the pandemic, given their dependence on sales taxes and other fees, which have dropped due to closures and limitations placed on retail establishments. The Brookings Institution estimates that state and local revenues will decline about 5.5% this year. Unlike the Federal government, which can borrow funds to make up for any budgetary shortfall, state and local governments have to spend within budget and can have no choice but to make cuts in the current situation, which could include job eliminations.
Virtually all job categories in the private sector registered gains last month. The largest increases were in Hospitality, which had been the hardest hit during the pandemic. The sector added 226,000 jobs, or 35% of all the gains. Another third of the new jobs originated from Professionals/Business Services, which added 208,000 jobs.
Retail Trade, an additional industry that suffered heavily in the March-to-May months when many shops went out of business, added 104,000 jobs.
Within K&B-related sectors, jobs in Construction increased by 84,000, or 13% of the total.
Many of the new jobs created last month were part-time jobs, accounting for 383,000 of the total added. There was a surge in part-time employment at the height of the pandemic shutdown, caused by many companies reducing the number of work hours. In March and April, the number of part-time jobs rose by 6.5 million, as illustrated by the spike in the chart below.
This is a reversal of the reduction of approximately 40,000 part-time jobs per month since 2016, when the economy started to boom and business demand turned part-time positions into full-time ones.
