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Driven By Delta Surge, August Hiring Dips Sharply

MICHEL MARTIN, HOST:

We're going to begin tonight with a reality check on the U.S. economy, which is still struggling to regain its footing amid the ongoing pandemic. The nation's economic recovery got tripped up last month by a sharp spike in new coronavirus infections. Employers added just 235,000 jobs in August. That's less than a quarter of the job gains in June and July. And the slowdown comes just as key parts of the pandemic safety net are starting to unravel. NPR's chief economics correspondent Scott Horsley is with us now to tell us more.

Scott, thanks so much for joining us.

SCOTT HORSLEY, BYLINE: It's good to be with you.

MARTIN: So what happened to all the hiring last month?

HORSLEY: Well, in a word, delta. You know, the late summer surge in coronavirus infections made people more cautious about eating out, going shopping. And you see that very clearly in these jobs numbers, especially for restaurants and retailers. They have been sensitive throughout the pandemic to swings, both up and down. In July, for example, restaurants added more than a quarter million jobs. But last month, they turned around and hit the brakes and actually cut 42,000 jobs. Now, President Biden says he will be announcing additional efforts to get more people vaccinated. But he tried to put a positive spin on this report by saying at least we're still adding jobs each month.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT JOE BIDEN: While I know some wanted to see a larger number today and so did I, what we've seen this year is a continued growth month after month in job creation.

HORSLEY: In fact, Friday's report showed job gains in June and July were even stronger than initially reported, with more than 2 million jobs added in total. But that just makes the August slowdown all the more disappointing.

MARTIN: Scott, I see, though, that there are still a lot of job openings. So how is the pandemic affecting people's willingness to work?

HORSLEY: Well, there's no doubt it's keeping some people on the sidelines. More people said they were unable to work because of the pandemic in August than did the month before. And that was the first time that figure had actually gone up since last December in the midst of another COVID wave. Some people are not going back to work because they're worried about getting sick. Others might be busy looking after kids. It was hoped that the reopening of schools this fall would free up more parents to go back to the workforce. And we could still see that when the September jobs numbers come out. But, you know, the delta wave also threatens to interrupt in-person schooling for a lot of people, so there's no guarantee.

MARTIN: Meanwhile, the Biden administration's effort to block evictions was struck down by the Supreme Court, and pandemic unemployment benefits are set to expire next week. Scott, what does that mean for the broader economy?

HORSLEY: It certainly adds to the misery of people who are in danger of losing their homes and their financial lifelines. Congress has authorized a lot of money in rental assistance, but in many parts of the country, it's been painfully slow getting that money into the hands of the people who need it. And as for unemployment benefits coming to an end next week, that's going to leave millions of people with less spending power.

As of mid-August, there were more than 12 million Americans getting some kind of unemployment assistance. About 9 million of them are going to be cut off entirely this coming week. And the rest will see their benefits cut by $300 a week. Wells Fargo estimates that will drain nearly $30 billion a month out of the economy. Eventually, that should be replaced by wages when people do find jobs. But that's not happening as quickly as we perhaps hoped when this timetable was put into place.

President Biden said on Friday that states might want to extend the jobless benefits using alternative funds from the American Rescue Plan, but there's really been no federal push to do that on a widespread level. Some have argued those relatively generous unemployment benefits were discouraging people from going back to work. But a number of economists have looked at that and found that if anything, the benefits are a small factor keeping people on the sidelines. Taking away the benefits, however, does lead to a big drop in spending. And that could have ripple effects throughout the broader economy.

MARTIN: That is NPR's Scott Horsley. Scott, thank you so much.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.