A Now Hiring sign hangs near the entrance to a Winn Dixie grocery store in Hallandale, Florida on September 21, 2021.

Joe Raedle | Getty Images

The September job report, released on Friday, provided further evidence that unemployment benefits did not significantly hamper the labor market during the pandemic era.

Employment growth – 194,000 new payrolls – was well below expectations in September, slowing from months ago. According to the Bureau of Labor Statistics, the number of employed, a metric that is employed and actively looking for a job, has fallen by 183,000 since August.

The data provides the first snapshot of the U.S. labor market since the end of the federal extended unemployment benefits on Labor Day. The September report suggests that despite the phasing out of these benefits, many workers have failed to find new jobs or jumped off the sidelines to look for work.

This Labor Day “cliff” had affected approximately 8.5 million Americans, according to the Department of Labor. More than 2 million others received a $ 300 weekly benefit cut.

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Some economists and policymakers believed that government benefits were holding back the recovery. It is becoming clearer that other factors, particularly the Covid Delta wave, have played a bigger role in limiting economic activity, according to labor experts.

“All evidence points to a pandemic [unemployment benefits] not the main factor, “said Nick Bunker, director of economic research for North America at Indeed Hiring Lab.” The best guess right now is that it’s the pandemic itself. “

“This is still a job report from the Delta Wave,” added Bunker.

Muted role

The September job report is the latest evidence of the subdued role that improved federal performance has played. These benefits included a $ 300 weekly allowance and assistance for groups not normally eligible for government support, such as gig workers and the long-term unemployed.

Twenty-six state governors, all but one Republican, withdrew from the programs in early June or July to push people back into the job market.

However, economic research found that the layoffs did not cause the intended job rush. Some even found negative effects.

“In fact, we find that the loss of welfare benefits is associated with modest declines in employment growth, income growth and participation,” Peter McCrory, an economist at JPMorgan Chase Bank, wrote in a research note last month.

The Labor Day lockdown affected more people than the June-July batch because it included high-receiver states like California and New York. Some economists had expected the effects to be stronger after Labor Day – which has not yet happened.

While the positive impact on job growth has been “relatively subdued” so far, that could change later this year and when households use up any accumulated savings, according to Daniel Zhao, chief economist at Glassdoor.

“Ultimately, the September report will not have the final say in the debate on the impact of the [unemployment insurance] Advantages, “said Zhao.

However, Friday morning’s job report was widely viewed as a disappointment after employment growth spiked in spring and early summer.

Employment growth in the private sector averaged 488,000 over the three months to September. This is a significant slowdown from the last few months: Job growth averaged 652,000 and 726,000 in the three months that ended in August and July, respectively.

“As shocking as today’s employment numbers are, even more worrying is the decline in the workforce,” said Neil Bradley, executive vice president and chief policy officer of the US Chamber of Commerce. “We are in the midst of a labor shortage crisis and the number of potential workers is shrinking.”