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Zillow Market Pulse: October 2, 2020

mattspeakman
·4 mins read

October 2, 2020

The September job figures confirmed that the labor market is losing steam. The economy added 661,000 jobs last month, well below expectations, and almost 11 million jobs from February are still missing. Permanent unemployment continues to rise and some groups are being left behind.

The labor market did improve in September…

  • The U.S. economy added 661,000 jobs in September.

  • The headline unemployment rate fell to 7.9%.

…but the pace of improvements is slowing, job losses are becoming more permanent…

  • The share of the prime age (ages 25-54) population with a job fell on the month.

  • The number of people who were permanently let go rose 345,000 in September to 3.8 million.

…and certain groups appear to be getting left behind.

  • 86% of the people who left the labor force in September were women.

  • White employment has recovered at a far faster rate than that of other races.

So what?

The last jobs report before the 2020 federal election showed a labor market that is still improving but doing so at a drastically slowing speed. Job figures from July and August were revised upward, but today's September job numbers were universally viewed as a disappointment. U.S. employers added more than 660,000 jobs in September, an undeniably huge number in more-normal times. But in today's world, when the number of jobs lost since February exceeds 10 million, even several hundred thousand jobs added in a month does not move the needle much (in comparison, peak job loss during the Great Recession was about 8.7 million). Today's report was perhaps the clearest indication so far that the recovery in the labor market is losing momentum. Payrolls are down 7% from peak pre-pandemic, February levels — a shortfall higher than in any recession that has occurred since World War II. And while the unemployment rate fell by 0.5 percentage points from August, it did so for unhealthy reasons. The labor force participation rate – the share of working-aged people either working or looking for work – fell, while the share of the population with a job rose only slightly. We would expect both of these figures to improve notably if the economy was truly strengthening.

The rising rate of permanent unemployment continues a disturbing trend that has been gathering momentum for the last few months. While the headline unemployment rate fell, alternative measures that quantify more-persistent joblessness increased. Permanent job losses rose by 345,000 in September from August, to 3.8 million – a figure almost three times higher than in February. The more job losses that are no longer deemed temporary means that there are fewer positions that can more-easily be recovered, like those who were temporarily furloughed and can be called backas their employers resume normal operations. More than anything, the uptick in persistent unemployment adds to the argument that the challenges in the labor market are going to take much longer to solve than previously thought.

Finally, today's report highlighted persistent and growing labor market inequalities across demographics. Of the 1.01 million people who dropped out of the labor force in September, 865,000 of them (about 86%) were women. Omitting April and May – when the most-severe drops in unemployment due to the pandemic were recorded — the female labor force participation rate now sits at its lowest level since 1987. Research suggests that women aged 25-44 are about three times as likely as men to stop working in order to help with childcare, findings that appear to align with today's report. Racial differences are also apparent in today's report. Of the jobs lost by Black men and women since February, barely a third have been recovered, while 60% of white men and women who lost their jobs since the pandemic began are now back to work. So, as the once-swift recovery in the labor market recovery has slowed, it appears to have worsened already deep labor market divides across demographics.

Click here to read past editions of Zillow’s Market Pulse updates.

The post Zillow Market Pulse: October 2, 2020 appeared first on Zillow Research.