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A lot of people went back to work in August. Will the hiring continue?

The US unemployment rate fell in August to 8.4 percent from 10.2 percent the prior month as employers added 1.4 million jobs.LM Otero/Associated Press

The Labor Department released its widely anticipated report on the job market Friday, and there was plenty in it for economic optimists to savor over the long holiday weekend.

Employers added 1.4 million jobs last month, a bit more than analysts had forecast. The unemployment rate fell to 8.4 percent from 10.2 percent in July, a much larger drop than expected.

But the report wasn’t unalloyed good news. Jobs gains were driven by the hiring of temporary census workers, and 13.6 million Americans were still without a job, more than double the number in February, before the coronavirus pandemic hit.

“We are still moving in the right direction and the pace of the jobs recovery seems to have picked up, but it still looks like it will take a while — and likely a vaccine — before we get back close to where we were at the beginning of this year,” said Tony Bedikian, head of global markets at Citizens Bank in Boston.

It’s not clear just how long it will take to clamber out of the COVID-19 crevasse. The government’s Employment Situation Report, which is based on dual surveys of employers and households, highlights several crosscurrents that may roil the job market in the months ahead.


First, after a big hiring surge in May (2.7 million jobs) and June (4.8 million), payroll growth has slowed in the past two months. A range of other economic data — retail sales, industrial production, housing sales — are also rising.

But economists caution that without another big dose of financial support from Washington, the trend could reverse.

“We still need fiscal support,” Dec Mullarkey, managing director at SLC Management in Wellesley, said earlier this week.

Second, no one expected unemployment to decline as much as it did, but it wasn’t a fluke.


The consensus among forecasters was for the jobless rate to edge down to 9.8 percent. The actual decline was much steeper, and at 8.4 percent, unemployment is now below the 10 percent peak reached in the wake of the Great Recession.

There are months when the jobless rate falls at least in part because people drop out of the workforce in frustration that they can’t land a job. But in August the labor force expanded by 185,000, and a greater-than-expected number of people found work.

The ranks of the unemployed fell by 3.8 million last month, a drop that may also reflect self-employed workers, who are not counted in the Labor Department’s survey of employers, restarting their jobs.

“Even with an increase of people looking for jobs, more were able to find them than last month,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management in Boston. “The bad news is that 8.4 percent is still very much elevated in a historic context.”

It’s worth keeping in mind that the Labor Department has more than one measure of unemployment. Its broadest category — which includes workers employed part time but who would prefer a full-time job, and those who aren’t currently looking for a job but say they want to work — stood at 14.2 percent in August, compared with 22.8 percent in April.

Third, government hiring boosted payrolls, a trend that may not last.

One-quarter of the jobs created in August (344,000) were in the government sector. And most of those (238,000) were workers hired on a temporary basis to take the 2020 Census.


In the private sector, the biggest gains were seen in retail (249,000); professional and business services (197,000), though more than half of those were in temporary help services; leisure and hospitality (174,000), with three-fourths of the gain in food services and bars; health care (75,000); and private education (57,000).

Fourth, employment gains haven’t been shared equally.

Jobless rates among Black and Hispanic people are usually higher than those for white people, and it often takes people of color more time to find a new job following a recession. Here is a telling comparison of unemployment by race for August 2020 and the same month least year.

August 2020 August 2019
White 7.3 percent 3.4 percent
Black 13 percent 5.4 percent
Hispanic 10.5 percent 4.2 percent
Asian 10.7 percent 2.8 percent

And finally, we’ve got a long way to go.

The rebound from April’s lows is far from complete. Employers have added back 10.6 million jobs in the past four months, less than half the 22 million that vanished in March and April.

In August, the number of permanent job losers rose by 534,000 to 3.4 million, an increase of 2.1 million since February.

The number of involuntary part-time workers last month was 3.3 million higher than in February.

And the number of people out of work for 15 weeks or more in August was 8.1 million, up from 2.1 million a year earlier.