Labor Market Recovery Slows, Pulled Down by Seasonally Weak School Hiring

October 02, 2020

The number of private sector payroll jobs jumped by 877,000 in September, but the number of state and local school jobs fell by 280,500 and the Census Bureau laid off another 33,900 temporary Census workers.

The unemployment rate dropped to 7.9% and has fallen by almost half since its peak of 14.7% in April, but the number of permanent job losers increased by 345,000 in September to 3.8 million.

The switch to virtual teaching combined with some schools not reopening held down the number of teachers that usually return to work in September.  While the raw number of state and local education jobs rose by 948,000, that was 280,000 less than what usually happens in September.

Employers have now restored 51.5% of the 22.2 million payroll jobs lost in March and April, and at the current pace of hiring, private sector employers will have restored all of the jobs lost to COVID by September 2021.  That is six months later than trends indicated since 

Those industries with the largest job gains include:

  • Hotels, restaurants and bars (+251,000);
  • Retail trade (+142,400);
  • Transportation and warehousing (+73,600);
  • Arts, entertainment, recreation (+67,000); and
  • Manufacturing (+66,000).

Long recovery ahead?  Social distancing restrictions and other business adaptations are likely to limit job growth well into the future.  Automation and AI implementation may also limit future job gains.  Potentially higher corporate taxes next year, depending on the election, could also hold back 2021 hiring.