- The number of
jobs added in September came in at a paltry 194,000, far below economists' expectations. - It was the first jobs report to capture the widespread impact of federal
unemployment ending early.
September showed conclusively that federal
Over the summer, 26 states ended their participation in federal unemployment benefits early, cutting off an additional $300 a week in an effort to get people back to work. The Biden administration chose not to step in and pay out benefits through the Department of Labor - even though several federal judges reinstated the benefits throughout July and August - and millions of Americans lost benefits.
Then the White House agreed with business groups' and Republicans' demands to allow the federal unemployment programs to end in September. In July, President Joe Biden said it "makes sense" for emergency federal aid for jobless Americans to end.
Now we know that the end of unemployment benefits isn't strongly linked to job gains. Friday's jobs report, the first to show the widespread effects on the labor market of ending enhanced unemployment, said the US added just 194,000 jobs in September. It captured the sentiment of cut-off workers around the country, not just in those 26 mostly Republican-governed states.
The September payrolls were a huge miss from the gain of 500,000 jobs that economists surveyed by Bloomberg had expected. The week that the Bureau of Labor Statistics surveyed Americans and businesses for its hiring data ended on September 18, when the Delta variant was just starting to ease from its peak.
In September, labor-force participation (the share of people who are actively seeking work or employed) ticked down - the opposite of what you'd expect to see from the end of unemployment pushing people back to work.
"I think it is going to be disappointing for employers who were hoping that the expiration of benefits would push many workers back into the labor force," Daniel Zhao, a senior economist at Glassdoor, told Insider. "The evidence so far during the recovery has not suggested that there would be a flood of workers back into the labor force, and I think this September report just compounds that evidence."
The unemployment rate in September did tick down, to 4.8%. That's a promising sign, though a decline in labor-force participation can also bring down the unemployment rate, since fewer people say they're actively searching for jobs. The survey week captured only the first week without benefits in the remaining 24 states, so it's still early, but the Delta wave is a much bigger deterrent to work than stingy unemployment benefits. The
"Also, all that talk of end UI being a big driver. It's a nothingburger," Justin Wolfers, an economics professor at the University of Michigan, tweeted. "The real issue is - and remains - the virus."
Ending benefits cost millions of people reliable income
Many of the 26 early-opt-out states also ended pandemic-era programs that expanded both who was eligible for unemployment and how long people could receive it. For the first time, gig workers and freelancers were able to collect benefits. That meant that millions of unemployed workers lost their benefits completely when states pulled out of federal programs.
Research has found again and again that ending benefits early had little to no impact on actual employment, and in states that opted out, spending dropped by $2 billion. Experts warned that it was too early. Unemployed people told Insider they were still job-hunting and scared to work at some in-person jobs that were actively hiring.
One Pennsylvania mom told Insider that she couldn't return to work because her son was at high risk for COVID-19 and not eligible for a vaccine yet. She had to leave a longtime job that she loved to stay with him through virtual schooling.
The Biden administration and Congress didn't step in to extend benefits, though Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh told states they could continue benefits on their own. None did. And so 8.5 million people lost their unemployment benefits.
The White House did not respond to Insider's request for comment.