RACHEL MARTIN, HOST:
Hiring slowed to a crawl last month as a new surge in coronavirus cases slammed the brakes on the economic recovery. The Labor Department said this morning, U.S. employers added just 235,000 jobs in August. That's a sharp drop from June and July. We've got NPR's economics correspondent Scott Horsley with us this morning. Hey, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Rachel.
MARTIN: So if I remember right, the job gains early this summer were really strong. Now we've got this late-summer drop-off. What happened?
HORSLEY: Yeah. This is what we were afraid of. It turns out that job gains early in the summer were even stronger than initially reported. Revised figures show employers added more than a million jobs in July, 962,000 in June. But August hiring was less than a quarter of that. The wave of COVID cases tied to the delta variant is acting like a big speed bump for the jobs recovery. We've seen throughout this pandemic, when the health outlook deteriorates, people get more cautious about going out and spending money, and that cuts demand for workers. Bars and restaurants, for example, shed 42,000 jobs in August after adding a quarter million jobs the month before. Retailers also cut jobs last month.
John Waldman runs a scheduling software company, Homebase, that works with a lot of small businesses. And he says this looks eerily like what we saw during earlier waves in the pandemic.
JOHN WALDMAN: We are hearing anecdotally from our customers that absolutely it is the result of COVID. It would be hard-pressed to say that this is not COVID-related.
HORSLEY: Now, the Homebase data shows that slowdown is widespread across the country, but it is most pronounced in the Southeast, which has seen some of the biggest jumps in hospitalizations. On the other hand, New England, where COVID cases are somewhat lower, has seen a smaller drop in demand for workers.
MARTIN: So that's the demand for workers. What about the supply? Is this jump in new cases keeping people from looking for jobs?
HORSLEY: It doesn't help. You know, millions of people who were working before the pandemic are still not working today. And one big reason that's been cited is the fear of getting sick. Certainly, having more people vaccinated helps with that, but having more people in the hospital does not. And this latest wave of infections has also cast a shadow over the reopening of schools this fall. That, of course, was supposed to be the ticket for a lot of parents to go back to work. Once again, though, Waldman says there's just a lot of uncertainty.
WALDMAN: All of us who care about small businesses really wanted to be optimistic that a lot of the things keeping people from work were going to start to heal themselves a little bit here into the fall. And unfortunately, it looks like we're going to be dealing with challenges here for a little bit longer.
HORSLEY: Meanwhile, Rachel, the emergency unemployment benefits that Congress OK'd early in the pandemic are about to run out next week, and that's going to cut a crucial lifeline for about 9 million people.
MARTIN: Any bright spots in this report, Scott? I mean, who is hiring?
HORSLEY: Some people are. You know, warehouses and delivery services added 53,000 jobs last month. So clearly, people are still shopping. They're just doing a lot of online shopping. Factories added 37,000 jobs in August, which was up from July. There was a survey out earlier this week showing an acceleration in both new orders and production at factories during the month of August. And that might have been even stronger if factories could hire more workers, which they'd like to do. Factories have been plagued by turnover, as, you know, they're competing with other other factories and other industries for workers. That is pushing wages up. Average wages in August were up about 4.3% from a year ago. Unfortunately, prices have been rising even faster.
MARTIN: All right. NPR's chief economics correspondent Scott Horsley. Thank you.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
