Hurricanes Harvey, Irma Undercut U.S. Employment Reporting in September

Roy Maurer By Roy Maurer October 6, 2017
Hurricanes Harvey, Irma Undercut U.S. Employment Reporting in September
​The U.S. lost 33,000 jobs in September, likely as a result of the disruption brought on by the massive storms that made landfall in Texas and Florida, according to the Bureau of Labor Statistics (BLS).

Monthly job growth in the United States fell below zero for the first time in seven years. Over the prior year, employers had added an average of 172,000 jobs per month.

BLS Acting Commissioner William J. Wiatrowski explained that the destruction and large-scale evacuations brought on by Hurricanes Irma and Harvey, which made landfall on Sept. 10 and Aug. 25 respectively, led to employees not being counted on payroll when the data was collected by BLS. "Employees who are not paid for the pay period that includes the 12th of the month are not counted as employed," he said. "Many employees in areas affected by the hurricanes were likely off payrolls during the reference pay period for September."

Many businesses were still closed by the flooding that followed Hurricane Harvey on the Texas Gulf Coast when BLS started to survey employers in the middle of September, and Hurricane Irma hit Florida during the data collection period, Wiatrowski said.

The monthly BLS employment report does not include U.S. territories in the Caribbean, which were also battered by a series of storms, including Hurricane Maria which devastated Puerto Rico Sept. 20.

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Economists had been expecting an increase of 90,000 jobs, even after accounting for the hurricanes. But the BLS expects the decline to be short-lived as employers closed by the storms reopen, reconstruction efforts begin and employers who were unreachable can provide their employment data.

Over 100,000 jobs in bars and restaurants were counted as lost in September. The sector had been adding about 24,000 jobs per month over the last year.

Health care employment rose by 23,000 jobs in September, in line with its average monthly gain over the previous year. Job gains also occurred in transportation and warehousing (22,000 jobs), professional and business services (13,000 jobs), insurance (11,000 jobs) and finance (10,000 jobs).

Manufacturing and retail employment dipped in September by 1,000 jobs and 2,900 jobs respectively. Notably, building supply stores led job growth among retailers, adding 5,300 jobs, even as retailing overall reported a loss.

Rebecca Henderson, CEO of Randstad Sourceright, a talent acquisition, consulting and outsourcing firm headquartered in Amsterdam, noted the surge of contingent employment to support disaster recovery efforts already taking place. "FEMA [Federal Emergency Management Agency] has already filled hundreds of temporary positions to help rebuild communities impacted in Texas, Florida, Puerto Rico and the U.S. Virgin Islands," she said. "Job openings for contingent talent have also spiked in the construction and hospitality sectors, and we expect to see similar demand from the engineering and environmental sectors in the coming weeks and months."

The hurricane damage notwithstanding, the overall labor market picture is positive. "If you look at the household side of the data, everything here is good news," said Cathy Barrera, the chief economic advisor for online jobs platform ZipRecruiter, based in Santa Monica, Calif. "The labor force participation rate is up slightly … the number of unemployed people is down and the number of people who are employed is up this month by 906,000." If the job losses counted on the employer survey equated with job losses for individual workers, you would expect these indicators to have moved in the opposite direction, she said.

Harvey and Irma did not yet have an impact on the unemployment rate, which fell two-tenths of a percentage point to 4.2 percent, the lowest since February 2001. "While we may be concerned that this drop is due to people leaving the labor force, that is not the case," Barrera said. "The decline in unemployment together with the rise in the labor force participation rate suggest that the labor market is holding strong."

The unemployment rate has been steadily falling since a peak of 10 percent in 2009, at the height of the Great Recession. In September, the unemployment rates for adult men (3.9 percent) and blacks (7.0 percent) declined. The jobless rates for adult women (3.9 percent), teenagers (12.9 percent), Asians (3.7 percent), Hispanics (5.1 percent) and whites (3.7 percent) showed little change.

The number of long-term unemployed—jobless for 27 weeks or more—held at 1.7 million and accounts for 25.5 percent of the unemployed.

The number of individuals categorized as involuntary part-time workers—seeking full-time employment but working part time—dropped to 5.1 million in September.

Additionally, 1.6 million people were considered marginally attached to the labor force, down by 275,000 from a year earlier; they are unemployed but want and are available to work, and had looked for a job sometime in the previous 12 months. Among this group, 421,000 individuals were considered discouraged—not currently looking for work because they believe no jobs are available for them.

The remaining 1.1 million people marginally attached to the labor force in September had not searched for work in the past month for reasons such as school attendance or family responsibilities, according to the BLS.

Average hourly earnings increased 12 cents to $26.55 in September, partly due to the disruption in low-paying industries like retail and hospitality in areas affected by the hurricanes. That pushed the annual increase in wages to 2.9 percent from 2.7 percent in August, the largest gain since December 2016.

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