Dissecting the September Jobs Report
The Labor Department released its September jobs report which shows major impacts from hurricanes Harvey and Irma.
-33,000: The economy lost 33,000 jobs in September
4.2%: The unemployment rate fell to 4.2 percent
2.9%: Wages increased 2.9 percent over the past year
Despite the 33,000 lost jobs in September, there are several bright points in September’s jobs report. The 4.2 percent unemployment rate is a new post-recession low. According to Business Insider, it’s the lowest since February 2001. Additionally, wage gains increased in September by 2.9 percent, which is higher than the steady 2.5 percent increases we’ve seen most of this year. That number could be skewed because low wage food service and hospitality workers who were out of work due to the hurricanes were not included in the figure. However, the New York Times reports that there are signs the labor shortage is starting to increase wages.
September’s jobs report is the first time in seven years that the U.S. economy has shed jobs. However, the Wall Street Journal reports that economists say the number holds no weight because of the impacts of hurricanes Harvey and Irma. After Hurricane Katrina, the economy saw similar impacts, but those were temporary, resolving in about two months. The vast majority of the jobs lost were in food service and hospitality, which will likely return as Florida and Texas recover. However, economists did expect modest job gains of about 80,000 in September, so in that case, the job losses were worse than anticipated.
Because this jobs report is such an outlier due to hurricanes Harvey and Irma, it’s important to understand some of the numbers behind their impact. Although Hurricane Harvey hit in late August, it didn’t have a large impact on the August jobs report. According to the Labor Department, Texas and Florida account for about 7.7 percent of U.S. employment. Most reported job losses occurred in the food, tourism and hospitality in those states. The jobs will likely return, but since many of those positions are hourly and employees were not paid while the hurricanes shut down much of those industries, they are considered job losses. However, the Labor Department reports that the hurricanes had no impact on the unemployment rate.
Additionally, according to the Wall Street Journal, 1.5 million Americans reported that they had a job in September but were not working because of the weather. That’s the highest number since January 1996, when a blizzard hit the Northeastern part of the country, resulting in 60 deaths and causing $585 million in damage. This demonstrates the massive impact of hurricanes Harvey and Irma had on September’s jobs report.
Puerto Rico and the U.S. Virgin Islands, which both suffered significant hurricane damage, are not included in the Labor Department Survey.
We’ll have our analysis on the October jobs report when it comes out next month.