Thread by @ChadCBPP

The Fed’s actions to lower inflation will take time to fully show up in the labor market, but the slowing job growth in today’s #JobsReport suggests the start of its impact. Policymakers should be preparing measures now to relieve hardship if unemployment begins to rise. 1/14

Well-designed, targeted measures will not interfere with the Fed’s efforts to address inflation. 2/14

Employers added 263k jobs in September with revisions of 11k in July and August. Total (private plus government) jobs are 514k above Feb ’20 pre-recession levels with private jobs up 1.1mm and government jobs down 597k, 309k of that deficit in local gov’t education. 3/14

A strong policy response to the COVID-19 recession in early 2020 helped reverse some of the huge initial job losses, and subsequent actions at the end of 2020 and in early 2021 helped re-energize a jobs recovery that has since erased Apr 2020’s 22-million-job deficit. 4/14

Job growth has moderated recently. With payroll employment now above its Feb ’20 pre-pandemic level and the Fed tightening monetary policy to fight inflation, some slowing of job growth is to be expected in an economy largely recovered from the recession. 5/14

While overall job creation has been solid, leisure and hospitality is still 1.1 million jobs below its level in Feb ’20, and state and local education jobs are still well below pre-recession levels. 6/14

The unemployment rate fell back to 3.5%, its Feb ’20 prerecession rate, as the # of unemployed workers fell by 261k. Employment rose by less (204k), however, for a net reduction in the size of the labor force of 57k. 7/14

As a result, the employment-to-population ratio (Epop) was unchanged at 60.1, 1.1 pts below its Feb ’20 pre-recession rate, and the labor force participation rate (% of the population employed + unemployed) edged down to 62.3% (compared with 63.4% in Feb ’20). 8/14

For prime-age workers ages 25-54 LFPR fell 0.1 ppt to 82.7%, which is still just 0.3 ppt below Feb ‘20’s 83.0%. 9/14

Prime Age LFPR is a better indicator of overall labor market conditions than the headline LFPR for the 16-and-and over population, which has a downward trend unrelated to economic conditions arising from the large baby-boom generation aging out of the labor force. 10/14

URs for Black, Hispanic, Asian, and white workers are all close to pre-pandemic rates. Black UR went up from 6.4 to 5.8 in Sep, white UR went from 3.2 to 3.1, Asian rate went from 2.8 to 2.5, Hispanic rate went from 4.5 to 3.8, but longstanding disparities persist. 11/14

A long history of structural racism and discrimination in employment and other areas has contributed to Black and Latino workers experiencing higher rates of unemployment than white workers. In good times and bad, the Black UR has been roughly twice the white UR. 12/14

If unemployment begins to rise, Black and Latino workers, who are particularly poorly served by the unemployment insurance system, will experience the greatest hardship bit.ly/3Erarrg 13/14

A rise in unemployment associated with Fed efforts to fight inflation will bring hardship to unemployed workers and their families that the current UI system will not address. Policymakers must take steps to have emergency measures in place to address this hardship. 14/x