September Jobs Report: Decent Job Gains, But the Digging Out Continues  

By at 2 October, 2020, 2:36 pm

by Raymond J. Keating-

The September employment report from the U.S. Bureau of Labor Statistics requires some untangling.

First, the establishment survey pointed to a gain of 660,000 in nonfarm payrolls. After massive declines in payrolls during March and April, there was a partial snapback in May and June, with subsequent months experiencing gains, but at reduced amounts for each successive months.

Second, the household survey, which better captures startup and small business activity, at first glance, seemed to offer good news: “In September, the unemployment rate declined by 0.5 percentage point to 7.9 percent, and the number of unemployed persons fell by 1.0 million to 12.6 million.”

Third, those household survey headlines, however, require a closer look. For example, while the number of unemployed fell by 970,000 in September, the labor force declined by 695,000 with the number of employed increasing by 275,000. So, the vast bulk – that is, 72 percent – of the decline in the number of unemployed was because of the labor force declining, that is, people exiting the labor force. Those not in the labor force increased by 879,000. As a result of these labor force gyrations, the labor force participation rate actually declined from 61.7 percent in August to 61.4 percent in September.

Fourth, with the increase of 245,000 in employment, the employment-population ratio edged up from 56.5 percent to 56.6 percent.

Fifth, to provide some perspective on where we stand, and how deep the hole remains, while the civilian noninstitutional population increased by 1.2 million from February to September, the labor force dropped by 4.4 million, with the labor force participation rate declining from 63.4 percent  to 61.4 percent. Employment fell by 11.2 million, with the employment-population ratio going from 61.1 percent to 56.6 percent. The number of unemployed increased by 6.8 million and those not in the labor force rose by 5.5 million.

In the end, the fact that jobs were added in September is obviously positive. However, the decreasing rate of job additions, and various labor force numbers moving in the wrong direction warrant continuing concern. And a central worry is the devastation occurring on the small business front. If we want to see job creation, then we need to experience small business creation, certainly not small business destruction.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.



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