Unemployment Rate Falls to 8.4 Percent

For the first time since the COVID-19 pandemic, the unemployment rate fell to single digits as the U.S. looks to a recovery. Veteran search consultants Michael Muczyk of Connor Caitlin Talent Solutions, Kent Burns of Simply Driven Executive Search, and Peter Sweeney of Came Sweeney share their views.

September 4, 2020 – Employment rose by 1.4 million in August as the U.S. unemployment rate fell to 8.4 percent, according to the most recent U.S. Bureau of Labor Statistics report released this morning. That’s down from a peak of 14.7 percent in April, but still far above the 3.5 percent rate in February before the coronavirus pandemic led to mass economic shutdowns across the country.

Economists and officials have also now focused more closely on the Labor Department’s data on “permanent job losers,” or those who do not expect to be called back from temporary layoffs, as a warning sign of the longer-term impacts of the pandemic on the labor market. In August, the number of permanent job losers increased by 534,000 to 3.4 million after holding steady month over month at about 2.9 million in July.

“We have had three huge months of job gains, but so far have regained less than half of the losses in March and April,” Dan North, senior economist at Euler Hermes North America, told NBC News. “Job gains so far have probably been the easy ones to get, where a business opened back up and brought back in its employees.”

“While still nowhere near pre COVID-19 levels, the modest increase in leisure and hospitality roles in today’s jobs report reflects the slow reopening of economies around the country,” said Rebecca Henderson, CEO of Randstad Global Businesses and executive board member. “The August job gains are a positive sign, however the service sector will need to be prepared for a potential second wave of the virus that could coincide with the holiday season.  Having a pipeline of contingent talent that can be deployed where and when they are needed most will help businesses remain agile and adaptable to this changing market.”

In August, 24.3 percent of employed persons teleworked because of the coronavirus pandemic, down from 26.4 percent in July. These data refer to employed persons who teleworked or worked at home for pay at some point in the last 4 weeks specifically because of the coronavirus pandemic.

Where Job Growth Occurred 

  • Employment in government increased by 344,000 in August, accounting for one-fourth of the over- the-month gain in total nonfarm employment. A job gain in federal government (+251,000) reflected the hiring of 238,000 temporary 2020 Census workers. Local government employment rose by 95,000 over the month. Overall, government employment is 831,000 below its February level.
  • Retail trade added 249,000 jobs in August, with almost half the growth occurring in general  merchandise stores (+116,000). Notable gains also occurred in motor vehicle and parts dealers (+22,000), electronics and appliance stores (+21,000), and miscellaneous store retailers (+17,000). Employment in retail trade is 655,000 lower than in February.
  • In August, employment in professional and business services increased by 197,000. More than half of the gain occurred in temporary help services (+107,000).
  • Architectural and engineering services (+14,000), business support services (+13,000), and computer systems design and related services (+13,000) also added jobs over the month. Employment in professional and business services is 1.5 million below its February level.
  • Employment in leisure and hospitality increased by 174,000 in August, with about three-fourths of the gain occurring in food services and drinking places (+134,000). Despite job gains totaling 3.6 million over the last 4 months, employment in food services and drinking places is down by 2.5 million since February.
  • In August, employment in education and health services increased by 147,000 but is 1.5 million below February’s level. Healthcare employment increased by 75,000 over the month, with gains in offices of physicians (+27,000), offices of dentists (+22,000), hospitals (+14,000), and home healthcare services (+12,000). Elsewhere in healthcare, job losses continued in nursing and residential care facilities (-14,000). Employment in private education rose by 57,000 over the month.
  • Employment in transportation and warehousing rose by 78,000 in August, with gains in warehousing and storage (+34,000), transit and ground passenger transportation (+11,000), and truck transportation (+10,000). Employment in transportation and warehousing is down by 381,000 since February.

  • The other services industry added 74,000 jobs in August, reflecting gains in membership associations and organizations (+31,000), repair and maintenance (+29,000), and personal and laundry services (+14,000). Employment in other services is 531,000 lower than in February.
  • Financial activities added 36,000 jobs in August, with most of the growth in real estate and rental and leasing (+23,000). Employment in financial activities is down by 191,000 since February.
  • In August, manufacturing employment rose by 29,000, with gains concentrated in the nondurable goods component (+27,000). Despite gains in recent months, employment in manufacturing is 720,000 below February’s level.
  • Employment in wholesale trade increased by 14,000 in August, reflecting an increase of 9,000 in the nondurable goods component. Wholesale trade employment has declined by 328,000 since February.
  • In August, employment changed little in mining, construction, and information.

Veteran Recruiters Weigh In

“We are seeing mostly replacement hires for retiring workers or in some cases backfilling promotions,” said Michael Muczyk, managing partner of Connor Caitlin Talent Solutions. “Growth hires in the chemical, paints & coatings, and pigments have been flat to down with some limited exceptions.”

Related: Companies Planning Big Comeback Post-Pandemic Crisis

“My belief is that the unemployment rate will stagnate until we get ahead of the current pandemic crisis,” Mr. Muczyk said. “If new cases accelerate in the fall then the unemployment rate may surge again. The fact that it’s an election year just adds to the unpredictability to what may happen in late 2020.”

“The latest unemployment report is consistent with what we’re experiencing with clients and candidates in the marketplace,” said Kent Burns, president of Simply Driven Executive Search, a member of the Sanford Rose Associates. “Don’t believe everything you read and hear. The mindset we see is, “Ok, this is how it’s going to be for a while – but we still have to move forward.” My firm had a very strong July, and August 2020 was our best month since August 2019,” he said. “Our clients continue to engage us to recruit talent for them. Companies want to hire, and talent wants to work.”

“Employers are still cautious in the industrial sector, where I play,” said Peter Sweeney, founder and managing partner at Came|Sweeney. “Sure, a senior executive who dies or is fired will be replaced, but new or discretionary initiatives have slowed. I am sure large cap, high growth technology, and to a lesser extent, healthcare and select consumer product companies are less risk averse to discretionary expansion of their workforce.”

Related: 10 Tips for Networking with Executive Recruiters During COVID-19

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

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