A restaurant in Richardson, Texas, was hiring in early September, a month when the jobless rate fell, but many unemployed people left the labor force altogether.
Photo: LM Otero/Associated Press
Workers gave up looking for jobs across the U.S. in September, with the size of the labor force shrinking in more than half of the 30 states in which unemployment rates fell last month, Labor Department data released Tuesday showed.
Declining unemployment rates in states across the U.S. masked signs of labor-market deterioration. The unemployment rate fell to 7.9% at the national level in September, from 8.4% in August. The lower rate reflected both people finding jobs as well as those who couldn’t find work and exited from the labor force altogether.
Oren Klachkin, lead U.S. economist at Oxford Economics, said a slowing of the labor-market recovery amid the coronavirus pandemic is fairly broad-based. “Businesses have now likely rehired the workers they need to meet current demand and won’t look to significantly add more to their payrolls until the pandemic threat is addressed,” Mr. Klachkin said. “We see heightened risks that the labor market recovery will slow ahead.”
In New York, some 300,000 workers came off the unemployment rolls in September, pushing the unemployment rate down 2.8 percentage points to 9.7%. But this wasn’t because of a hiring boom. Instead, the hard-hit state saw an even bigger number of workers stop searching for work, suggesting that workers who had been employed in August exited from the workforce, too.
Labor-market trends brightened in around half of the country, as unemployment numbers fell. In Arizona and Utah, unemployment rates rose but the number of people employed or looking for work increased, both positive signs.
The longer people stay out of work, the rustier their skills get and the harder it is for them to find jobs again when the economy improves, economists say. Since growth depends in part on an expanding labor force, the loss of would-be workers could erode the economy’s potential.
Some economists said they were cautious in parsing month-over-month changes in the state data. Even in normal times, the data can prove volatile, said Richard F. Moody, chief economist at Regions Financial Corp. He added that seasonal adjustments—meant to smooth out data for annual changes in hiring patterns—may be distorting trends at the state level because of pandemic-related disruptions.
There isn’t a clear cause driving varying labor-market health across states, said Julia Pollak, labor economist at ZipRecruiter.
School-building closures, for instance, may be taking some working parents, particularly women, out of the workforce to care for their children. Yet, labor-force participation remained essentially flat in California, where many schools are closed, and in Florida, where many are open.
The numbers also didn’t offer evidence that more people started looking for jobs in states that reinstated work-search requirements for unemployment insurance, said Ms. Pollak. She also didn’t see signs that outbreaks of coronavirus were driving labor-force changes.
Write to Gwynn Guilford at [email protected]
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Appeared in the October 21, 2020, print edition as ‘Labor Force Shrinks in Several States As Workers Give Up Looking for Jobs.’
