Payrolls grew by 638,000 last month, and the unemployment rate fell sharply, by a full percentage point, to 6.9 percent. The report reveals a job market that’s healing, but at a slower pace than earlier in the year and with a long way to go to get back to full employment. Even with the large drop, the October jobless rate remains twice that of the pre-crisis rate.
Government jobs fell (by 268,000) last month, but because this is partially related the cutting back of decennial Census jobs, a clearer signal of underlying labor demand comes from the private sector, which added 906,000 jobs. That’s a decent clip, but in May and June, private sector gains rebounded at a pace of 4 million per month; since then, the pace has slowed to 1 million. At this rate, the private sector will be back to its pre-crises peak around late summer of 2021.
The figure below shows total and private payrolls. The remaining gap is clear–10 million overall and 9 million for private–as is the slower pace of gains.
This next figure shows the share of losses left to make back for many groups. The last two bars show that jobs are about halfway back. The first bar shows that because unemployment rate grew over 11 points from its low point to its high point–3.5 to 14.7 percent–and has since clawed back almost 7 points, it has made up 70 percent of its lost ground.
One important take from the figure is the slower progress by Black people. For both unemployment and employment rates, they lag other groups, having made back just half of their losses. This is an often-seen pattern for persons of color in weak labor markets, as they face labor market barriers, including racial discrimination, whose impact is accentuated in periods of weaker demand.
Another worrisome sign in today’s report comes from the extended duration of unemployment for some jobless workers. About a third of the unemployed are now long-term unemployed (searching for work for at least six months), compared to 4 percent in April. This reflects that when this initial shutdown occurred, many workers went on temporary layoff, and, in fact, the bulk of the decline in unemployment last month came from these temporary layoffs getting back to work. But this means that the folks still left on the jobless rolls are in for potentially long spells of unemployment.
This growth in people stuck in long-term unemployment is particularly problematic because extended unemployment insurance benefits are scheduled to expire at the end of this year. Re-extending these benefits and enhancing the dollar value of the claims should be policy makers’ first order of business in coming weeks.
Turning to sectoral analysis, almost 70 percent of private industries added jobs last month, a relatively high share given the spiking coronavirus. Notable job gains in this regard can be seen in leisure/hospitality, which includes restaurants and bars, up about 200,000 last month and 400,000 over the past two months.
Of course, it is very possible this gains attenuate in coming months given the sharply rising virus caseloads. While the relationship between the virus and commerce is far from one-to-one, meaning we don’t see March/April-type shutdowns in places where caseloads are climbing, we should be on the lookout for negative effects on jobs in sensitive, face-to-face services.
Finally, especially given lower-for-longer interest rates from the Federal Reserve, Congress needs to get back to the business of providing relief to the millions of workers who still face considerable hardship. State and local budgets are still much reduced, forcing layoffs, and even while the the labor market is improving, it remains far from providing the income vulnerable families need to pay rents, mortgages, child care, and to meet their nutritional needs.