Low Unemployment Rates and Job Growth, But Concerns Remain
According to the U.S. Labor Department, the unemployment rate dropped to 3.5 percent in September 2022. This low rate reflects the strength of the labor market and rising hiring levels.
In numbers, unemployed people fell also to about 5.7 million in the same month, and those who are employed rose to over 158 million. Compared with the high unemployment rate back in March of 202, at over 14 percent, the U.S. job growth looks promising.
For example, nonfarm employment increased by more than 260,000 positions in September. The unemployment rate for Hispanic workers also fell by almost 4 percent. Overall, the jobless rate is slightly higher for adult men compared with adult women—3.3. versus 3.1 percent—but unemployment remains low.
Even natural disasters did not impact the positive growth in jobs. Hurricane Ian did affect employment or unemployment.
Yet, some industries and people are still struggling to rebound from the COVID recession and future projections raise some concerns.
COVID 2019 to 2020 and 2022
The outbreak of COVID-19 triggered a recession in the United States. In 2020, the unemployment rate was about 8 percent throughout the year. Although the unemployment rate declined by the latter part of 2021, certain sectors are still feeling the effects of the pandemic.
From March to mid-2020, millions of workers lost their jobs, especially in industries with close interactions among people. Employment has rebounded, but not in a uniform way. By the end of 2020, industries such as tourism and locations like Las Vegas faced high unemployment rates and are still recovering from this drop in jobs.
Other industries that face a similar situation include Accommodation and Food Services, Retail Trade, and Arts, Entertainment, and Recreation. Accommodation and Food Services had a 44 percent job loss rate from COVID and is still trying to rebound to prior levels.
Some reports estimate that it could take over five years for these industries to fully recover to 2019 employment and unemployment levels.
Likewise, the impact on worker groups varies. Hispanic or Latino communities have suffered disproportionately from COVID-related unemployment. Urban areas with industries more impacted by the pandemic tend to have higher concentrations of Hispanic or Latino residents.
Likewise, the unemployment rate for Black workers in September 2022 is higher than the average at almost 6 percent. Both industry and worker demographics alter the picture of low unemployment.
The Government, Large Firms, and Recovery
To address the economic downturn, the Federal government passed relief and recovery measures in 2020 and 2021. The CARES Act and the American Rescue Plan were especially aimed to trigger an economic recovery. These measures provided over $5 trillion in relief to people and businesses.
Policymakers drew on lessons from the recession of 2007-2009 to both boost and extend relief measures. These policies help make the COVID-19 recession shorter.
Business rehiring decisions have also helped. Over 86 percent of jobs that were lost in the second quarter of 2020 came from reductions in those businesses that remained open, as opposed to those that closed. Those job losses were driven by larger companies with over 50 employees.
So, when these firms rehired employees, it substantially reduced the unemployment rate. However, the largest firms have also experienced slower-than-average recovery compared with before the pandemic.
It is estimated that larger companies ended 2021 with a 71 percent level of jobs filled. Smaller firms, on the other hand, have experienced a 96 percent return rate.
Although the business sector is expected to continue to grow, the rate of growth will depend on a full recovery from COVID-19.
The Road Ahead for Unemployment
Over the next year, the U.S. unemployment rate is expected to be around 4 to 4.5 percent. The job growth in September was larger than anticipated (263,000), but a slowing of this growth is projected.
The unemployment rate decreased to 3.5 percent last month, but some of that drop is from fewer workers leaving their jobs and some people leaving the labor force.
Economists are also predicting a recession for the early part of next year. If realized, this may also curtail job growth and increased unemployment. To find out more about unemployment trends and job topics, visit FreshGigsClub. Projections are hopeful but hesitant.