U.S. employers added 235,000 jobs in August, a marked slowdown.
The Labor Department report indicates the impact of the latest Covid-19 wave. Check back for live updates and analysis of the data.
Daily Business Briefing
Sept. 3, 2021Updated Sept. 3, 2021, 8:56 a.m. ETSept. 3, 2021, 8:56 a.m. ET
The Labor Department report indicates the impact of the latest Covid-19 wave. Check back for live updates and analysis of the data.
The Fed had been hoping for continued strong hiring. Instead it got a sharp slowdown.Understanding the monthly employment data.The venture capitalist who online creators turn to.Catch-up: Walmart is raising wages, and Elizabeth Holmes has a jury.
The American economy slowed abruptly last month, adding 235,000 jobs, a sharp drop from the huge gains recorded earlier in the summer and an indication that the Delta variant of the coronavirus is putting a damper on hiring.
The Labor Department report on Friday follows a sharp increase in coronavirus cases and deaths that has undermined hopes that restrictions on daily activities were nearing an end.
The unemployment rate was 5.2 percent, compared with 5.4 percent in July. Economists polled by Bloomberg has been looking for gain of 725,000 jobs.
The August showing would have been respectable in prepandemic times. But after gains of 962,000 in June and 1.05 million in July — and with more than eight million people unemployed — it was a sharp deceleration.
“Delta is a game-changer,” said Diane Swonk, chief economist at Grant Thornton, an accounting firm in Chicago. “It’s not that people are laying off workers in reaction to Delta but people are pulling back on travel and tourism and going out to eat and that has consequences.”
Restaurant reservations on OpenTable were close to normal levels earlier in the summer, but are now 10 percent below where they were before the pandemic. There has also been a sharp decline in hours worked at restaurants and entertainment venues, according to data from Homebase, which provides time-management software to small businesses.
Leisure and hospitality employment in August was unchanged, according to the Labor Department, after strong gains in previous months. Retail jobs declined by 29,000.
Moreover, the Labor Department data was collected in the second week of August, so it may not reflect the full extent of the Delta spread or the impact of Hurricanes Henri and Ida in the second half of the month.
Although many experts expect economic growth to dip in the current quarter from the annualized rate of 6.5 percent in the spring, the economy is expected to remain in expansion mode for the rest of the year.
Gross domestic product has regained the ground lost in the pandemic. The housing market is robust, and Wall Street has been notching records as corporate results remain strong.
Manufacturing has been more muted, held back by supply chain disruptions and shortages of critical parts like semiconductors for automakers.
For Americans who are out of work, robust hiring is essential if unemployment is to get back to the 3.5 percent rate that prevailed before the pandemic. The plight of the jobless is compounded by the expiration of federally funded unemployment benefits after this week, which will affect an estimated 7.5 million people.
Jerome H. Powell, the Federal Reserve chair, has suggested that he would like to see continued job gains before slowing the central bank’s support for the economy.Credit…Susan Walsh/Associated Press
Federal Reserve officials who have been looking for continued improvement in the labor market received a discouraging piece of news on Friday, when the Labor Department reported that employers added 235,000 jobs in August — far fewer than projected and a sign that the Delta variant may be weighing on hiring.
The Fed has been buying $120 billion in government-backed bonds each month to keep longer-term interest rates low and many types of borrowing cheap, bolstering lending and spending to help the economy heal. Officials are debating when and how to pare back those bond purchases, and investors are looking for an announcement about the planned start of the so-called taper at one of the Fed’s coming meetings.
But central bankers have tied their policy path closely to the labor market, suggesting that the economy has not yet quite achieved the “substantial further progress” they had hoped to see on the jobs front. Officials including Jerome H. Powell, the Fed chair, have signaled that although the economy has made adequate strides toward the central bank’s inflation goal to justify a slowdown in bond buying, they would like to see continued job gains before they feel confident in removing support.
“They believe we’ve met substantial further progress for inflation,” Matthew Luzzetti, chief U.S. economist at Deutsche Bank, said before the report. “We’re just waiting on meeting that threshold for the labor market.”
Mr. Powell said during a speech last week that as of the Fed’s July meeting, he and most of his colleagues thought the Fed could start reducing the pace of asset purchases this year if the economy performed as they expected.
“The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the Delta variant,” Mr. Powell added, saying that the Fed would be “carefully assessing incoming data and the evolving risks.”
The jobs report showed a sharp pullback in hiring in leisure and hospitality, which tends to be especially sensitive to virus outbreaks. At the same time, wages continued to rise in general and for leisure and hospitality workers in particular — suggesting that employers are paying up to lure employees, and hinting that labor supply issues may be part of the reason they hired more slowly in August.
The Fed has other tools to support the economy, even after it begins to slow its bond purchases. The central bank’s main policy interest rate, which guides short-term borrowing costs and affects consumer rates from mortgages to car loans, is at rock bottom and is likely to stay there for months or even years.
But slowing bond purchases will be the first step toward a more normal policy setting, and a sign that the Fed thinks the economy has come through the turbulent pandemic lockdown period and is making strong progress toward a full recovery.
The central bank is tiptoing gingerly when it comes to removing policy support compared to after past recessions: The unemployment rate dropped to 5.2 percent in the August report, and is likely to be substantially lower by the time the Fed increases rates. After the 2008 recession, the Fed had finished tapering and raised rates in late 2015, when joblessness was around 5 percent.
The slower reaction this time comes in part because economic conditions have been evolving so quickly. But more than that, many policymakers have come to see the Fed’s decision to start raising interest rates in 2015 — before the labor market was operating at full speed or inflation had stabilized — as a mistake. The Fed formally reworked its policy approach last year, laying out a more patient game plan and qualifying its employment target as a “broad-based and inclusive goal.”
The best indicator of the economy’s health is the Labor Department’s monthly jobs report. Here’s how to decode it:
The jobs report is based on two surveys.
One counts people, and the other counts jobs. They generally point to parallel trends, but there are some notable differences.
The household survey counts how many people are in the labor force — either working or actively looking for work.
Lately that’s been around 161 million, still fewer than before the pandemic.
The number that gets the most attention — the overall increase or decrease in jobs — comes from the survey of employers. Before the pandemic, a gain of 100,000 to 200,000 would be considered solid. But with the economy still nearly six million jobs short of where it was before the pandemic, it takes a bigger increase for a report to qualify as good news.
So far this year, the monthly gains have averaged about 600,000.
The unemployment rate is the percentage of those people who aren’t working. Early last year, that rate was at its lowest point in decades — 3.5 percent. When the pandemic hit, it shot up to 14.8 percent. It has fallen steadily since then, to 5.4 percent in July.
If the unemployment rate goes up, that isn’t always purely bad news.
Sometimes the number goes down because people have stopped looking for work, so they aren’t counted as part of the labor force.
And sometimes the unemployment rate goes up because more people have decided to look for work but haven’t found a job yet. That can signal economic optimism.
In a fast-moving economy, the numbers behind the monthly jobs report are a bit dated. The household survey is generally conducted on the calendar week that includes the 12th of the month, and the survey of employers is taken in the pay period that includes the 12th.
The employer survey, with a bigger sample, is considered more reliable. But it does not take into account the self-employed, unpaid family workers, domestic help or agricultural workers.
Generally, the numbers are seasonally adjusted. That means the effects of ordinary weather changes, major holidays and school schedules are removed so that underlying trends are more evident.
“Everything I invest in is a creator-focused company,” said Li Jin, founder of Atelier Ventures.Credit…Ross Mantle for The New York Times
If there is such a thing as an It Girl in venture capital these days, Li Jin would fill the bill. She sits at the intersection of start-up investing and the fast-growing ecosystem of online creators, both of which are red hot.
She formed her own venture firm, Atelier Ventures, last year and has raised a relatively small $13 million for a fund, but Ms. Jin was among the first investors in Silicon Valley to take influencers seriously and has written about and backed creators for years, Taylor Lorenz reports for The New York Times.
A Harvard graduate who was inspired by the ideas of Friedrich Engels and Karl Marx, Ms. Jin, 31, is also aggressively pro-worker. She has made it clear in podcasts and her Substack newsletter that creators should get the same rights as other workers. Among the ideas she has championed is a “universal creative income,” which would guarantee creators a base amount of money to live on.
Now as large venture capital firms flock to influencer start-ups, and as Facebook, YouTube and others introduce $1 billion creator funds, Ms. Jin’s track record has made her a go-to business guru for many digital stars who are trying to navigate the fast-changing landscape.
Hank Green, 41, a top creator on YouTube and TikTok, said he often tossed ideas back and forth with her by phone. Markian Benhamou, 23, a YouTuber with more than 1.4 million subscribers, credited her with understanding what creators go through. Marina Mogilko, 31, a YouTube creator in Los Altos, Calif., said Ms. Jin “started the whole creator economy movement in Silicon Valley.”
“She was talking about the creator economy years and years and years before anyone else was,” said Jack Conte, a co-founder and the chief executive of Patreon, a crowdfunding site for content creators. “She really sees the future before other people do.”
Employers have faced challenges hiring and retaining workers during the pandemic.Credit…Matt Rourke/Associated Press
Walmart is raising hourly wages for about 565,000 workers in the latest example of a large employer trying to attract and retain employees in a challenging labor environment. The pay raise, which will total at least $1 an hour and will take effect Sept. 25, will apply to workers in departments such as food and general merchandise. The company’s average wage will rise to $16.40, Walmart said, though its minimum wage still lags that of other large retailers such as Target and Amazon. As of Sept. 25, Walmart’s minimum starting wage will rise to $12 an hour from $11.
Uber postponed its return-to-office date to Jan. 10, after earlier delaying it to Oct. 25 from Sept. 25.
Locast, a nonprofit streaming service that piped local broadcast signals over the internet, is shutting down after a federal judge ruled against the organization in a rare case tackling the legality of network content delivered online. The organization said it was “suspending operations, effective immediately,” and it added that Locast was meant to “operate in accordance with the strict letter of the law,” but had to comply with the ruling, with which it disagreed.
A jury of 12 residents of Northern California and five alternates was sworn in on Thursday for the fraud trial of Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, which is set to begin next week. Finding jurors who had never heard of Theranos, which collapsed in 2018 after reports that its blood-testing technology did not work as advertised, was a challenge. Scheduling was another issue. The trial is set to last 13 weeks or longer and some jurors were dismissed because they had upcoming surgeries or long-awaited vacations.
Prompted by an investigation by the Japanese Fair Trade Commission, Apple will allow some companies to direct their users to payment methods outside its App Store.Credit…Brooks Kraft/Agence France-Presse — Getty Images
On an Apple device, the one thing you cannot do in Netflix’s app is subscribe to Netflix. A message on the app’s home screen explains this and encourages new users to return “when you’re a member.” It’s up to them to figure out how to do that.
This confusing setup is an effort to comply with Apple’s rules banning apps on its platform from directing users to make purchases elsewhere, and avoiding Apple’s 30 percent commission. But it’s likely to change soon. Apple announced on Wednesday that it would allow some apps, like Netflix and Spotify, to direct their users to payment methods outside of the App Store. That’s the second concession to app developers that Apple has made in the past week, suggesting it’s part of a deliberate campaign.
Analysts who track Apple said that these changes won’t significantly affect the tech giant’s $20 billion App Store business. Rather, Kellen Browning and Daisuke Wakabayashi report for The New York Times, the moves are a strategic retreat, an effort by Apple to repel threats that would be more damaging to its bottom line. (Apple declined to comment.)
Apple is under pressure from regulators around the world who have accused it of exerting too much control over developers who sell products in its App Store. South Korean lawmakers on Tuesday passed a bill that would ban app stores from forcing developers to use only their proprietary payment systems. Apple also faces antitrust investigations in the United States, the European Union, Britain and India. And it is awaiting the verdict in a lawsuit brought by Epic Games, which sought to avoid Apple’s commissions altogether.
But Apple is unlikely to concede so easily on its cash cow: game revenue. According to Epic’s lawyers, 81 percent of Apple’s App Store revenue came from games in 2016. Apple’s chief executive, Tim Cook, said on the witness stand in May that the “majority” of App Store revenue still comes from game revenue. Daniel Ives, an analyst at Wedbush Securities, estimates the money Apple collects from apps for consuming content — the type of app covered by the latest concession — is negligible.
There are more substantive changes Apple could make, and is most likely hoping to avoid. It could reduce its commission on in-app purchases, allow other companies to install app stores on iOS devices or allow customers to download apps directly from the internet. The changes Apple has made are aren’t “a real solution,” Daniel Ek, the chief executive of Spotify, said Thursday in a tweet. “Our goal is to restore competition once and for all, not one arbitrary, self-serving step at a time.”