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Economy adds 638,000 jobs in October as unemployment falls to 6.9% amid COVID-19 spikes

The U.S. economy added 638,000 jobs in October as payroll growth roughly held steady despite a surge in COVID-19 cases and Congress’s failure to provide more aid to unemployed Americans and struggling businesses.

The unemployment rate fell from 7.9% to 6.9% despite a big jump in the number of Americans working or looking for jobs as many landed positions, the Labor Department said Friday.

Economists had estimated that 600,000 jobs were added last month, according to a Bloomberg survey.

The report comes as Democrat Joe Biden edged closer to victory in a presidential election that partly served as a referendum on President Trump’s response to the pandemic and its punishing economic toll.

Although last month’s employment gains were outsized by historical standards, the increases have slowed for four straight months since peaking at 4.8 million in June. The nation has recovered about 12 million, or 55%, of the 22 million jobs wiped out in the health crisis as states have reopened restaurants, shops and other businesses shuttered by the outbreak, and brought back many furloughed workers.

But recovering the rest could take several years, economists say, and a growing share of temporary job losses have become permanent as businesses downsize or close for good. Since mid-September, nearly half of Americans who stopped receiving regular unemployment checks have shifted to extended benefits, which generally kick in after six months, according to Oxford Economics.

“Thus, rehiring is taking place to only a moderate degree,” Oxford economist Kathy Bostjancic wrote in a note to clients. Early in the recovery, millions of furloughed employees were quickly recalled.

Last month, the number of Americans on temporary layoffs fell by 1.4 million to 3.2 million. About a third of unemployed workers said they were on temporary layoff, down from 36% the previous month.

Some good news: The ranks of workers permanently laid off dipped from 3.8 million to 3.7 million. The figure had been steadily rising as a growing number of temporary layoffs became permanent.

Several other forces also curtailed job gains last month, as 147,000 temporary workers for the 2020 Census were cut. And local education jobs fell by 98,000, the second straight sharp drop. Janitors and other school staffers didn’t return to work as usual because of remote learning in many regions, according to Goldman Sachs.

Hiring is also being curtailed by spikes in coronavirus cases, with the nation surpassing 100,000 new daily cases for the first time this week. About a dozen states have reinstated business restrictions – such as banning indoor dining and bar service — or suspended plans to ease them.

Karen Fichuk, CEO of Randstad North America, a staffing firm, says strong hiring has been concentrated in industries that have benefited from the pandemic, such as warehousing, e-commerce and technology, with hiring in the latter surging 35% in November compared to last month.

Meanwhile, Congress remains deadlocked over a new stimulus package that would renew at least part of a $600 federal supplement to state unemployment benefits that expired in late July and provide more aid to distressed small businesses, among other measures. This week’s election is likely to leave the Senate controlled by Republicans, who have favored a smaller relief package, but clear the way for a resolution of the impasse.

More federal aid “would help a lot,” says Shannon Roberts, CEO of Brand Builders, of Middle River, Maryland, which stages events for the wine and spirits industry. When the pandemic began in March, all of her firm’s 1,050 events that month were canceled and Roberts furloughed all but two of her nine executives – before eventually laying them off — and cutting her 375 part-time contract workers.

“We were destroyed,” she says.

Some events, such as wine tastings, have slowly returned, with 50 scheduled this month but it’s “so little that it’s nothing,” Roberts says. She has brought back just 15 to 20 of her contract workers at 15% to 20% lower wages.

By next summer, assuming a vaccine is available, she hopes to recover about half her former revenue and rehire some additional employees.

“I don’t think about closing,” she says. “I have faith.”

Meanwhile, many laid-off Americans can’t work because they’re caring for children. Since Alyssah Mailloux, of Hudson, New Hampshire, was furloughed from her social service job at adult day care center in March, the 30-year-old single mother has been taking care of her eight-year-old son while he attends online classes at home.

When the $600 federal bonus to her jobless benefits ran dry over the summer, Mailloux cut back on eating out and take-out dinners. She has been hunting for call-center jobs that allow her to work from but has found few that meet her financial needs.

“That’s been very tough,” she says.

Industries that are hiring

Leisure and hospitality, the sector hardest hit by the crisis, led the payroll gains with 271,000, mostly at bars and restaurants. Professional and business services added 208,000 jobs; retail, 104,000; health care, 79,000; and transportation and warehousing, 63,000.

Construction added 84,000 jobs amid a booming housing sector and a comeback in commercial and public building. And manufacturing added 38,000 jobs as the industry continued to recover due to a surge in business investment and consumer spending on appliances and other goods.

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