The Bureau of Labor Statistics jobs report for August came out today, and it was way below expectations. The economy added 235,000 jobs, about 500,000 fewer than expected. This year, monthly job growth has averaged 586,000 jobs, according to the report.
Last week, I wrote about how more government spending won’t solve this job situation. The unintended consequence of the pandemic is a huge increase in worker productivity. The pandemic motivated businesses to figure out how to do the same amount of work with fewer workers, and they don’t want to undo those gains now that the pandemic recession is over.
In June of this year, GDP was at the same level it was at pre-pandemic — with 6.6 million fewer people employed. We can produce the same amount of stuff as before the pandemic with 6.6 million fewer people making the stuff. That’s a huge gain in productivity per worker, and we’ve seen wages go up to compensate workers for their increased efficiency.
That’s all good. We have more jobs than people to fill them. It’s not a “job creation” problem. It’s a job-filling problem, and it’s going to take time to solve.
Our economy has been transformed by the pandemic. Think of services you use now that you didn’t use before, and services you used to use that you don’t use anymore. Then, remember there are 330 million other people like you. Businesses have to respond to those swings in consumer preferences, and that process is not immediate.
Smart entrepreneurs will see our post-pandemic economy as a huge opportunity. They’ll come up with ideas that we haven’t thought of yet to respond to consumers who want different things than they wanted before.
As the $300-per-month federal unemployment supplement comes to an end on September 6, some workers on the margin should be pushed into employment. But don’t expect any sea changes in the employment situation because of that. It’s going to take time. It takes time to match people with job openings. And it takes time for entrepreneurs to develop new opportunities to employ the people who want to work.