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October job numbers were likely stronger. Why the future still looks uncertain

Forecasters think job growth accelerated last month after a slowdown in August and September, but millions of would-be workers are still on the sidelines, leaving the pace of the recovery in doubt.

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It’s a critical question that continues to confound policymakers: When are the millions of workers who are still on the sidelines coming back?

For the economy, the stakes are high. Employer are keen to hire and desperately need workers.

Yet the strong job growth seen early in the summer unraveled over August and September, when a surge in coronavirus infections tied to the Delta variant kept many potential workers at home, while discouraging customers from traveling or eating out.

There is hope that the labor market is again starting to pick up. The Labor Department issues its October employment report later on Friday, and economists surveyed by Reuters expect it will show that the U.S. added about 450,000 jobs last month.

That would be more than double the gains in September, when employers added just 194,000 jobs — the weakest performance all year.

“A lot of what we’re seeing in the last 90 days is because of Delta,” Federal Reserve chairman Jerome Powell said Wednesday at the end of the central bank’s policy meeting. “Delta put us on a different path.”

However, such a pickup in October would still leave the economy over 4 million jobs short of where it was before the pandemic began.

And questions about when or even if sidelined workers will return to the labor force continue to weigh on the U.S. recovery.

There were more than 10 million unfilled job openings at the end of August. From factories to furniture stores, businesses are desperate for additional help.

Previous hope about a jobs recovery have been dashed

There are promising signs as the health outlook has improved in recent weeks, helping spark an increase in restaurant reservations and airport traffic.

Powell said that the waning impact of the Delta variant should lead to stronger job growth, though perhaps not as strong as the million-plus jobs that were added in July.

Throughout the year, the U.S. has averaged between 550,000 and 600,000 jobs per month.

“If we should get back on that path, then we would be making good progress,” Powell said. “And we’d like to see that of course.”

Some analysts expected to see a big return to the workforce in September, as schools reopened and pandemic unemployment benefits expired nationwide. So far, it hasn’t materialized.

That’s left employers competing for scarce job applicants, driving up wages especially in traditionally low-paid industries like bars and restaurants.

Average wages for all workers were up 4.2% in September compared to a year ago, but for many workers that’s not enough.

More than 3 million people who left the workforce during the pandemic have not yet returned.

After Karen Schenck’s bartending job in Tucson, Arizona dried up in the summer of 2020, she moved in with her sister in California, and found gig work as a part-time delivery driver.

“It’s a hustle,” Schenck says. “It’s not my favorite thing.”

She welcomes the break from in-person customer contact, though. And she’s reluctant to return to her old bartending job, even as her former employer is eager to re-hire her.

“It’s so nice to not be yelled at by somebody just because I wasn’t quick on the draw with a Budweiser,” Schenck says.

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