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Axios Capital

Data: Bureau of Labor Statistics; Chart: Axios Visuals

The U.S. economy added a meager 235,000 jobs in August, while the unemployment rate fell from 5.4% to 5.2%, the government said Friday.

Why it matters: It's the first jobs report to factor in the extent of the COVID-19 surge driven by the Delta variant — showing a massive slowdown in the recovery after July's blockbuster jobs report. Economists had expected 725,000 jobs to be added.

The big picture: The pandemic is far from over, and it's still hobbling the American economic recovery. This weak report will dissuade the Federal Reserve from pulling back on the amount of cash it's injecting into the economy every month. 

By the numbers: June saw 962,000 new jobs added, and July did even better with 1.05 million. In August, however, the pace of change slowed dramatically, with a gain of just 235,000 jobs — and none at all in the leisure and hospitality industries. 

The other side: Wage growth was very strong, with earnings rising 0.6% in a single month, or 4.3% on a year-over-year basis. The unemployment rate also continued to decline, hitting a new pandemic-era low of 5.2%.

Between the lines: Each successive wave of COVID-19 does less harm to the economy than the one before.

As Harvard's Jason Furman points out, the first wave of the pandemic had a lower death toll than we're seeing right now, but caused some 22 million job losses. 

This time around, we're still adding jobs, albeit at a slower rate than a month or two ago. 

What they're saying: "The most telling number" in the report is the number of people who don't have a job but want one, tweets Michigan economist Betsey Stevenson. That declined sharply, from 6.5 million in July to just 5.7 million in August.

In other words: While Delta rages, a lot of Americans have no desire to go out to work.

The bottom line: The recovery won't get back on track until the Delta surge subsides.

U.S. added 235,000 jobs in August, a massive slowdown

Wall Street expected 725,000 jobs to be added.

Jobs

Economy & Business

“We are going to see a very different economy down the road, and ensuring that we can tool people to move into those better jobs will be essential, ” Goodwill Industries CEO Steve Preston tells Axios.

Why it matters: Today’s labor mismatch isn’t just about COVID fears and unemployment insurance. Steve Preston would know — as the CEO of Goodwill Industries, which runs more than 650 career centers across the country, he’s been on the front lines of getting people back to work.

State of play: The demands of the labor force were changing — skewing more digital and higher-skilled — even before the pandemic hit.

Companies’ labor needs are different now. “I think it's something we don't talk about right now because we feel this big disequilibrium,” Preston says.

“The shift is going to continue — and existing jobs will require upskilling even more now,” he adds.

Between the lines: Goodwill's career centers lean in to digital skills training. In a partnership with Google, for example, it offers a five-tier program starting with the basics of computers, all the way up to programming.

Of note: The private sector should be hands-on in upskilling the workforce — as demonstrated in the Google partnership, Preston says.

“It's not just that [Google] is helping us fund programs. They're giving us curriculum, helping us understand what people need, and they've hired people from our program,” he says.

Employers should also expand the definitions of who is qualified for certain jobs — some companies require a degree or certificate for jobs that don’t actually need them, he says.

Widening the net also applies to considering formerly incarcerated individuals for jobs, he notes. Goodwill trains — and also hires — people who have been through the criminal justice system.

The bottom line: The current jobs transformation is not a problem belonging to just the jobless.

“This affects who we become as a country ... It affects our global competitiveness because a tooled labor force, with the right skills, will help us compete in a global economy.”

One-on-one with Goodwill Industries CEO Steve Preston

“We are going to see a very different economy down the road."

Steve Preston. Photo: Goodwill Industries International

Axios Finish Line

Not only does gig work come with low and unpredictable wages, but gig workers — who make up an increasing percentage of the workforce — can also have a difficult time accessing government benefits and social services.

What's happening: While plenty of resources exist to help gig workers find jobs, new apps like Steady are helping them access the types of career support, mentoring and benefits that on-the-books corporate employees enjoy. 

The problem: Our society is structured to support people in traditional jobs, but more and more people are doing gigs — and getting left behind.

Income verification: Many gig workers are classified as independent contractors, and many are making money from a number of gigs, which makes it hard  — or even impossible — to verify income and qualify for benefits.

Benefits: Gig workers were not eligible for unemployment insurance before the CARES Act, and they're still not eligible for some other temporary benefits, including COVID-19 paid leave. The pandemic exposed these issues, Alex Rosenblat of the Aspen Institute writes in the Harvard Business Review.

Federal assistance: It's also difficult for gig workers to qualify for types of assistance like SNAP benefits and Medicaid, says Adam Roseman, co-founder of Steady, a financial services app for gig workers.

What's happening: There are as many as 55 million gig workers in the U.S. — and that number is only rising as the pandemic pushes more people into delivery jobs.

"But gig work's flexibility comes at the cost of stability," says Shelly Steward, director of the Future of Work initiative at the Aspen Institute.

Driving the news: Steady is out with a new feature called Income Passport, which verifies gig workers' income so they can more seamlessly access benefits. 

One of the key resources gig workers lack is data about their career trajectories and opportunities for new jobs or growth, Roseman says. They also lack career support and guidance from colleagues and managers. 

Steady is attempting to provide that by creating an online platform for gig workers that compiles data on their earnings, clues them in on new job opportunities and even offers cash to tide them over during hard times.

"It's like a hub for gig workers," says Denae, a gig worker in Baltimore and a user of the app. "It bridges the gap for me." When Denae crashed her car — her main source of income as a delivery and ride-share driver — Steady sent her money for groceries.

Shaquille O'Neal, the former NBA player and a co-founder of Steady, reminded Axios in an interview that gig work was around long before the pandemic. "This is reality," he said. "This is what my parents did. My dad drove trucks on the weekends to buy me shoes."

What to watch: Look for the rise in gig work to give rise to even more startups to provide resources and data to the workers.

The overlooked perils of gig work

Our society is structured for people in traditional jobs.

Illustration of a giant hole in the ground shaped like a briefcase

Gig economy

New York City Mayor Bill de Blasio is directing the city's municipal office workers to return to in-person work by Sept. 13, the New York Times reports.

The big picture: Despite growing concerns about the Delta variant, de Blasio is intent on showing the city reopening, a promise made during an aggressive vaccination campaign.

An email went out on Wednesday to all agency heads with the new order. It noted that “telework will only be allowed in limited circumstances," per the Times. 

On Tuesday, de Blasio signed an executive order requiring city employees to be vaccinated or produce weekly COVID tests.

The order applies mainly to the city's 80,000 office workers. NYC employees more than 300,000 municipal workers. Most perform essential services.

The city has been phasing workers back into offices since May 5 with reduced capacity.

NYC mayor orders city workers back to their offices

Workers will have to return to offices by Sept. 13 despite concerns about the Delta variant.

Two men walk on a sidewalk in front of tall buildings, shot from the street level.

New York City

The U.S. faces a range of health care flashpoints — unaffordable drugs, opioids, vaping — as we debate whether to adopt universal care. For now, the Affordable Care Act is the law of the land, but Republicans want to issue it a final death blow.

Health

As more and more employers nix college degrees as a hiring requirement, students are choosing cheaper, faster alternatives to college like coding boot camps.

Why it matters: The cost of college keeps climbing, and federal student loan debt sits at a whopping $1.6 trillion. Students are debating whether college is worth it — especially when it may no longer be necessary to get a high-paying job.

What's happening: College enrollment was down around 5% this spring compared with the spring of 2020, according to the National Student Clearinghouse. That's nearly 730,000 fewer students.

The pandemic is contributing to the drop as students choose to delay college either because they can't afford it or because they don't want to attend remote classes. But universities were hurting before the pandemic and will keep struggling after it, says Ryan Craig, managing director of Achieve Partners, a venture capital firm focused on the future of higher education.

"The underlying crises of affordability, completion and employability continue unabated," he says. 

So for many students, training programs or boot camps that can teach technical skills in a matter of months can be a smarter bet than a traditional college or university.

At the same time, a number of large employers — including Google, Bank of America, EY, Apple, IBM and Penguin Random House — no longer require college degrees.

Training programs are especially effective when getting jobs in software, IT and health care, Craig says. And interest in these programs has been surging during the pandemic.

"A lot of companies are realizing that you don't need a more traditional college education to be a good software engineer," says Kate Lillemoen, who dropped out of college and enrolled in a coding boot camp with Tech Elevator. "It's changing very quickly." She now has a software job.

But, but, but: There are still millions of jobs that do require college degrees, and even for the jobs that don't, there is still a hiring bias that favors degree-holders.

On top of that, there are not nearly enough training programs to prepare America's workforce for the jobs of the future, says James Rhyu, CEO of Stride Inc., an education company.

The bottom line: "We need a cultural shift," Rhyu says. "We have generations and generations of parents that are just conditioned that their kid should go to college. But our country's mantra should be, 'No college required.'"

Students skip college

College enrollment dropped during the pandemic.

Illustration of a graduation mortarboard with a "skip" symbol on it

Education

Axios What's Next

Percentage of U.S. auto workers employed by foreign automakers

Data: Bureau of Economic Analysis; Chart: Will Chase/Axios

Foreign automakers and suppliers now employ more U.S. workers than domestic carmakers do, according to fresh data from the U.S. Bureau of Economic Analysis. 

Why it matters: The American auto industry is not the Detroit-based monolith it used to be. The shifting landscape now counts Chrysler as part of the Dutch giant Stellantis and Tesla as one of America's Big Three. Meanwhile, global carmakers and suppliers have been steadily expanding their U.S. manufacturing footprints.

By the numbers: About 51% of the 999,000 U.S. workers in the motor vehicles and parts manufacturing sector are employed by companies based in other countries, according to BEA data through 2019, the latest available. 

Auto suppliers, the vast majority of which are foreign-based, account for many of those jobs, notes the Center for Automotive Research. 

What they're saying: “This is all driven by investment," Nancy McLernon, president and CEO of the Global Business Alliance, tells Axios. "Global automakers are making big bets on U.S. manufacturing because we have a huge consumer market, a skilled workforce and a strong business climate."

Details: Toyota, Mazda, Honda, Volkswagen, Volvo, BMW, Mercedes and Hyundai have all added jobs in the last few years.

Some are using their U.S. factories for exports. BMW, for example, exported almost 219,000 vehicles from the U.S. in 2020.

Fear of tariffs on imported vehicles and parts under the former Trump administration also contributed to global carmakers' growing U.S. footprint, industry sources tell Axios.  

The bottom line: It's not just autos, McLernon says. 

69% of all new U.S. manufacturing jobs added in the past five years were created by global companies.

The face of America's auto industry is changing

The American auto industry is not the Detroit-based monolith it used to be

Automakers

Transportation

The next U.S. jobs report could be a big market-moving event.

Why it matters: The Fed wants to know if the U.S. labor market has made “substantial further progress,” the vague threshold that would give the FOMC the confidence to dial back some of its emergency bond purchase program.

By the numbers: According to FactSet, economists estimate U.S. employers added 756,500 jobs in August, which would be a slowdown from the 943,000 added in July.

The unemployment rate is estimated to have fallen to 5.2% in August from 5.4% the month prior.

What they’re saying: “The softening in employment activity would be consistent with other economic data that have weakened since the surge in COVID case counts due to the Delta variant,” Bank of America U.S. economist Joseph Song says.

“Related to that,” Wells Fargo economists write, “the FOMC is likely to again consider deteriorating public health conditions as a detriment to ‘substantial further progress,’ which removes some heft from the August employment report when it comes to determining the timing of potential tapering.”

In other words, assuming job growth did decelerate significantly in August, then the FOMC may wait until after its Sept. 22 meeting to announce the timing of tapering.

What to watch: The August U.S. jobs report will be released at 8:30am ET on Friday.

Go deeper: The harm the Fed wants to avoid by tapering too early

What economists expect from the August jobs report

The Fed wants to know if the U.S. labor market has made “substantial further progress.”

A man walks by a "Now Hiring" sign outside a store in Arlington, Va.

A man walks by a "Now Hiring" sign outside a store in Arlington, Va. Photo: Olivier Douliery/AFP via Getty Images

Jobs report

Axios Closer

Incomes got a sizable boost in July. Nominal personal income grew 1.1% to $20.67 trillion during the month, accelerating from June's 0.2% monthly rise, according to Friday’s government figures.

Why it matters: July’s hiring spree and expanded child tax credits drove that growth.

This latest form of aid, which began mid-month and runs through the end of the year, comes at a key moment. 

Extra unemployment benefits are ending, and because consumers pulled back on spending last month due to new COVID concerns, the stashed-away sums will translate into future economic growth. 

Wages and salaries, which exclude government aid payments and other supplements, grew 0.9% month over month to a new high of $10.25 trillion amid job gains.

By the numbers: Disposable household incomes, or personal incomes less taxes, rose for the first time since March, by 0.7% to $18.05 trillion.

Consumer spending growth slowed to 0.3% in July, helping savings grow. 

Because incomes outpaced spending, personal saving climbed to $1.72 trillion, which translates to a personal saving rate of 9.6% in July, up from 8.8% in June.

What they’re saying: “While the expiry of UI benefits and the absence of another round of checks to families will weigh on income growth in 2022, the ongoing child tax credit and rebounding employment and wages should support household outlays next year,” Oxford Economics said in a research note Friday.

What to watch: “[W]e believe cooler consumer spending growth is more likely than consumers retrenching and the economy going into reverse,” Oxford notes. 

Go deeper: U.S. consumer sentiment nosedives as Delta variant spikes

July sees remarkable return of incomes after massive hiring spree

Wages and salaries grew 0.9% month over month to a new high of $10.25 trillion.

Illustration of money coming out of the sides of a briefcase.

Wages

Federal Reserve chairman Jerome Powell gave the strongest signal yet that some  pandemic-era support that's bolstered the economy and stock market might go away this year. But he stopped short of a firm commitment and timeline.

Why it matters: In a closely-watched speech, Powell was upbeat on the recovery — though he warned about the Delta variant and "harmful effects" of winding down support too soon.

What they're saying: "If the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year," Powell said, referring to the $120 billion worth of bonds it buys each month.

Yes, but: There's "much ground to cover" before the Fed eases lifts off of rock-bottom interest rates, Powell said — another way the Fed's goosed the economy.

Details: Powell spoke at the annual Economic Symposium in Jackson Hole, Wyoming — a conference that went virtual as the virus raged across the country.

Catch up quick: There's been a fierce debate among traders and economists about whether the economy has made "substantial further progress" toward the Fed's goals — what Powell has said could trigger it to pull back support. 

Prices are rising at the fastest rate in decades, though Powell again said this would prove to be temporary once supply chains are untangled and other reopening quirks fade.

The labor market has recovered nearly three-quarters of jobs wiped out at the pandemic onset. But it's still short 6 million, with millions more out of the job market altogether.

The intrigue: A parade of Fed officials — including some voting members — had the same message in a series media interviews ahead of Powell's speech: it's time to start tapering bond purchases, though they differed on exactly when. 

Fed chair says economic support could be dialed back this year

Powell was upbeat on the economic recovery, but warned about the looming risk of the Delta variant.

A television  on the floor of the New York Stock Exvhange broadcasts Jerome Powell speaking last month. (Photo: Michael Nagle/Bloomberg via Getty Images)

Federal Reserve

Stock market

Women have been joining the gig workforce at a rapid clip during the pandemic.

Why it matters: Gigs offer the flexibility that so many working women seek, but the jobs can come with low, unstable wages.

What's happening: Women have been disproportionately hurt by the pandemic — both because they were overrepresented in hard-hit industries like hospitality and service, and because they were likelier than men to leave jobs to care for children.

Many who lost or left their jobs turned to gig work for income.

The big picture: Women now represent 46% of the independent contracting workforce, up from 33% in May 2017, per the American Action Forum. Women have long dominated the gig workforces in areas like caregiving and home cleaning, but their rise in the delivery economy is more recent.

The number of women working for Uber's ride-share or delivery platforms has increased around 50% since January 2021, Uber says. 

Women now make up just under half of the delivery people on Uber Eats.

DoorDash's delivery workforce is 58% women. "There’s been an uptick in the last year," says Elizabeth Jarvis-Shean, VP of communications and policy at DoorDash. "What we’re offering is the kinds of earning opportunity that women in particular have needed during this pandemic."

There are lots of reasons why women are turning to app-based gig work, but flexibility tops the list.

80% of women on DoorDash said flexibility was the main reason they did the job. And 60% said the flexibility allowed them to care for a child or loved one, compared with just 30% of men.

50% of women delivering for UberEats said that working for ride-sharing or delivery platforms provided them the flexibility they couldn't get from a traditional job, compared with 34% of men.

Women also tend to prefer delivery work to ride-sharing work because it can be safer, and so the pandemic-era explosion of delivery has brought more women to the gig economy. "I don't want strangers in my car," says Katy Nolan, who drives for DoorDash in Seattle.

Danielle Hayden, a single mother of two, delivers for DoorDash as a second job to make extra money. When the pandemic struck and she was furloughed from her main job in hospitality, she picked up extra shifts and loved the flexibility.

"I can do it when I want, and I can take a break when I want and as long as I want," she says. Hayden has even brought her kids along so she can care for them and work at the same time.

But, but, but: "What gig work often does is reflect what's wrong in the broader labor market," says Shelly Steward, director of the Future of Work initiative at the Aspen Institute. "And many women right now are struggling."

Millions of women — especially working mothers — are looking for jobs that allow them to juggle responsibilities but find too often that flexibility is only available to high-earners in office jobs.

For everyone else, "sometimes the only option is to turn on an app," Steward says. "It's filling a need in the labor market."

The rise of women in the gig economy

These jobs can come with low, unstable wages.

Illustration of woman holding a laptop while walking on tightrope.

Axios Future

A survey of C-suite executives found more than a quarter are considering moving their operations to another state or country.

Why it matters: The forced march to remote work during the pandemic has shaken loose the bonds that tie large businesses to their home territory — and that could be bad news for high-cost cities and states.

By the numbers: In a poll of 150 C-suite executives released today and conducted by the consulting firm West Monroe, 29% of companies reported they were considering moving major operations or headquarters to another state or country.

The biggest reason was the cost of talent and living in their current location, followed by the burden of taxes.

Not surprisingly, the No. 1 destination under consideration was Texas, followed by Florida — two states with generally low costs of living and low tax burdens.  

Of note: West Monroe's chief strategy officer Tom Bolger tells Axios the West Coast "had by far more companies looking to relocate than any other geographical area in the survey."

That dovetails with recent reporting about tech companies and founders looking to relocate out of the Bay Area, which has some of the highest housing prices in the country.   

That includes Tesla and SpaceX CEO Elon Musk, who said in December that he was moving from California to Texas. 

Be smart: Companies complaining about the high cost of living and working in states like California or New York is hardly new, but the embrace of remote work — accelerated by the pandemic — has given workers and CEOs more options.

Nearly half of the executives polled by West Monroe said they had plans to split their workforces between remote and onsite, though only 1% said they would go fully remote.

"If I'm paying major city taxes in a place like New York City and it doesn't really matter for me if I'm in New York, why not go somewhere that's less expensive?"

The bottom line: Mayors of high-cost cities may need to fight to keep their businesses.

New survey shows companies are open to moving to cheaper locales

Remote work — accelerated by the pandemic — has made it easier for companies to seek out less expensive regions

The Phoenix office tower in Houston, Texas. The Lone Star State was the top stated destination for executives considering moving their operations. Photo: Loren Elliott/Getty Images

Future

Remote work

Business

Big Tech

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

A shock to the job market as massive and as sustained as the coronavirus will leave lasting change — and damage — in its wake.

The big picture: We jumped from the best labor market in 60 years, before the coronavirus, to the worst, in April. As the country comes back, millions of jobs lost during the pandemic will never come back, and there will be massive reallocations of jobs from some parts of the economy to others.

"This is the biggest thing since the Great Depression. It's absolutely enormous and incredibly fast," says Nicholas Bloom, an economist at Stanford.

What's happening: Even as states start opening up, new job postings in the U.S. are still down nearly 30% compared with February, according to an analysis by research firm Gartner.

But a closer look at which sectors of the economy are hiring tells us more about how the pandemic might alter the job market.

There's been a surge in postings for grocery and delivery workers. Amazon, Walmart and Instacart alone have hired around 700,000 people since the pandemic began.

Look for similar surges in cleaning, sanitation and construction in the coming weeks and months, Bloom says. Public spaces will need to hire cleaning crews and construction companies to keep spaces sanitized and add barriers or other distance-enforcing features.

We could also see increased hiring in high tech because jobs in that sector can often be done remotely, he says.

There is also data on the sectors that have suffered most and that will have the toughest recoveries.

Jobs like Uber driver, flight attendant, server and chef are among those that have seen the steepest hiring slumps.

Gartner notes that hiring in some of the hardest-hit areas of the economy — like hospitality and retail — is starting to climb back up. But millions of jobs will be gone for good as many stores and restaurants permanently shutter and people remain nervous about traveling.

And there's another longer-term — and seldom discussed — potential impact of the pandemic: So far, much of the pain has hit low-skill and low-wage jobs, but white-collar jobs will also be in jeopardy as the crisis grinds on, Bloom says.

Consider this: The bulk of job creation during the pandemic has been in low-wage jobs, like grocery and delivery, while other sectors freeze hiring altogether. If a graphic designer or a middle manager at a software company loses their job now, it'll be very difficult to find a comparable job out there.

The deteriorating labor market could also push discouraged, laid-off older workers — who are also at greater risk of becoming seriously ill if they contract the coronavirus — into early retirement.

"There will be a number of people for whom this will be the last job they have," says Bloom. "And waves of early retirement are really bad for the U.S. labor market."

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