Economy Adds 661,000 Jobs, Strengthening Case for Safely Reopening Society

Timothy Doescher / October 02, 2020

The Bureau of Labor Statistics reported Friday that the unemployment rate fell to 7.9% as the economy gained 661,000 jobs in September, continuing to show signs of recovery and make the case that policymakers must continue to allow more parts of society to safely reopen.

Although the unemployment rate beat experts’ predictions of 8.2%, the number of new jobs fell below predictions, largely due to closures of public schools and a decline in temporary workers for the 2020 census.

However, positive revisions to the July and August jobs reports added 145,000 more jobs than previously reported.

The new jobs report shows that temporary layoffs decreased by 1.5 million, down from the high of 18.1 million in April but still 3.8 million higher than in February.

In addition, the number of Americans who permanently lost their job increased by 345,000 to 3.8 million; this number has risen by 2.5 million since February.

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Unemployment rates declined in September for adult men (7.4%), adult women (7.7%), whites (7.0%), and Asians (8.9%), while the jobless rates for teenagers (15.9%), African Americans (12.1%), and Hispanics (10.3%) showed little change over the month.

The labor force participation rate, at 61.4%, fell by 0.3%, following increases in August and September. However, the U-6 unemployment rate—which measures both the unemployed who are looking actively for a job and those who are unemployed but not actively seeking work—fell from 14.2% in August to 12.8% in September.

The Bureau of Labor Statistics continued to conduct a supplemental survey to illustrate some of the changes we have seen since COVID-19 struck. The survey showed that in September, 22.7% of those employed teleworked, down from 24.3% in August.

In addition, 19.4 million Americans said they were unable to work, either in whole or part, because their employer closed or lost business due to the pandemic. This measure is down from 24.2 million.

About 4.5 million not in the labor force in September were prevented from looking for work due to the pandemic, down from 5.2 million.

Here are some of the largest gains and losses by sector:

Leisure and hospitality: +318,000 jobs (food services and drinking places accounted for +200,000 of those gains)

Health care and social assistance: +108,000 jobs

Professional and business services: +89,000 jobs

Transportation and warehousing: +74,000 jobs

Manufacturing: +66,000 jobs

Financial activities: +37,000 jobs

Construction: +26,000 jobs

Government: -216,000 jobs (mostly from losses in local government education, state government education, and temporary census workers)

Although for the most part this jobs report shows the economy headed in the right direction, it also presents tremendous opportunity.

Some 10.7 million fewer Americans are employed than in February. Although some of these jobs are permanently lost, policymakers should push to prevent more permanent job losses and to open doors to new income opportunities to replace lost jobs by safely opening up the economy.

Recently, we have seen several large corporations, including the Walt Disney Co., American Airlines, and United Airlines, announce thousands of job cuts because of coronavirus restrictions and lockdowns. We likely will see more.

In addition, many children are still at home attending school online since their schools are closed, forcing many parents to stay with them instead of going back to work, and potentially imposing long-term consequences on children’s futures.

Policymakers can and should do more.

As my Heritage Foundation colleague Rachel Greszler writes, the state-by-state numbers suggest that

the solution to a faster and fuller recovery is to balance saving lives and livelihoods by letting society safely resume most activities, respecting individuals’ rights to earn a livelihood, and providing the option of in-person education for children.

For the past five months, the jobs reports have shown the economy moving in the right direction. But clearly there is more work to do, particularly in places were government’s excessive restrictions are imposing unnecessary consequences.

Federal stimulus cannot prop up the economy forever and could backfire by distorting the decisions of households and businesses. The best path forward is for states to balance taking proper precautions with saving livelihoods by allowing the safe reopening of most parts of society.