What Does the August Data Say About the Labor Market?

This content leverages data from USAFacts, a non-profit that visualizes governmental data. You can learn more on its website, Facebook, and Twitter.

What’s the story?

• In August, the U.S. economy continued its recovery from the wave of over 22 million layoffs triggered by coronavirus pandemic-induced lockdowns in the spring, but while the unemployment rate continued to decline, the number of permanent job losses has been rising.
• The economy gained 1.37 million jobs in August and the unemployment rate declined by 1.8 percentage points to 8.4%. That continued a streak in which 2.7 million jobs were added in May, 4.8 million jobs gained in June, and an increase of 1.8 million jobs in July. Each of those months surpassed the pre-pandemic record for monthly job gains (1.1 million in September 1983), although they only represent about 48% of those that were lost and still leave the economy 11.5 million jobs below its February level.
• The USAFacts chart below shows how the unemployment rate was at or near a 50-year low of 3.5% for much of 2019 and the first two months of 2020 until the wave of layoffs hit in March and April 2020, at which point it spiked to 14.7% ― its highest level since the Great Depression. It has steadily declined during the last four months to 8.4% in August, which is less than the 10% peak of unemployment during the Great Recession in October 2009. During that recovery, the unemployment rate didn’t fall below 8.4% until January 2012.

• Prior to the pandemic there were about 800,000 people who were on temporary layoff, and that number shot up to roughly 18.1 million people in April. While that number has steadily declined as laid off workers return to work, the number of people who aren’t on temporary layoff due to the permanent elimination of their prior position has trended up. 
• In February 2020, there were about 1.9 million people in the labor market who permanently lost their jobs, but that number has been climbing recently to 2.9 million in May, 3.7 million in June and July, and 4.1 million in August ― of whom 3.4 million lost year-round jobs and 736,000 completed temporary work. The last time the U.S. had over 4.1 million people in the labor market who had lost their jobs permanently was March 2014, as this USAFacts chart shows:

• The number of new unemployment claims has been falling, with the 884,000 initial claims filed in state run programs in the week of August 29th only the second week since March that there were fewer than one million new claims (the first was the week of August 8th), while the end of August also saw the number of continuing claims fall below 14 million for the first time since the pandemic began after they peaked at 24.9 million the week of May 9th. This USAFacts chart shows the number of people making either initial or continuing unemployment claims each week: 

— Eric Revell

(Photo Credit: Elvert Barnes via Flickr / Creative Commons)