The August jobs report shows the pandemic is keeping workers home – not enhanced unemployment benefits

• The August jobs report showed dismal job growth, marking a bump in America’s economic recovery.
• The low number of jobs added shows that the pandemic is still strangling the economy.
• It also counters the narrative that enhanced benefits were keeping workers at home.
• See more stories on Insider’s business page.

The number of jobs added in August came in dismally below economists’ expectations, showing yet another bump in the road for America’s economic recovery.

August’s data also shows that the pandemic’s newest surge – and not enhanced unemployment benefits – is responsible for workers staying home.

America added just 235,000 nonfarm payrolls last month, according to the Bureau of Labor Statistic’s monthly report. Economists were anticipating an addition of 733,000 payrolls, Insider’s Ben Winck reports. It’s a huge slowdown from the 1.1 million jobs added in July.

In August, 5.6 million people said that they were unable to work due to the pandemic. That’s an increase from July, where 5.2 million cited the pandemic as keeping them from work. And 1.5 million people said that the pandemic prevented them from looking for work – a number that did not drop from July.

That shows the ongoing pandemic, and especially the rise of the more-contagious Delta variant, is still heavily weighing on the jobs market.

Notably, August’s jobs report likely captures our fullest picture yet of the impact that ending enhanced unemployment benefits had on workers. At least 25 states opted out of federal benefits early after similarly weak jobs reports this spring, with governors pointing to beefed-up benefits as the reason that people weren’t returning.

The stated goal for ending benefits was simple: To get people back to work.

“Alabama is giving the federal government our 30-day notice that it’s time to get back to work,” Gov. Kay Ivey said in a press release announcing that federal benefits would end June 19.

Benefits in those states all came to an end by mid-July; August’s report is based on the state of the labor market from August 8 to 14. The weak job growth numbers coming after the end of expanded benefits in half the states suggest that those cuts aren’t causing a surge in hiring, or at least not enough of a surge to overcome the Delta slowdown.

Research has found that states that ended benefits early lost $2 billion in consumer spending, which likely didn’t help the situation either.

Leisure and hospitality, a primarily in-person and low-wage industry that was hit particularly hard by the pandemic and shutdowns last year, had previously been leading the way in recovery. The sector added nearly 400,000 jobs in July, but in August, employment in leisure and hospitality was unchanged, adding a net zero jobs during the month – and food services and drinking places shed 42,000 jobs.

With enhanced benefits ending, those plentiful low-wage service jobs that some unemployed workers were being nudged towards – and where anecdotal labor shortages abounded – were stalling out. At the same time, more people were out of work due to the pandemic.

“Delta seems to be the overwhelming factor affecting the labor market right now,” Daniel Zhao, a senior economist at Glassdoor, told Insider. “It’s entirely possible that the withdrawal of enhanced unemployment benefits led to a small increase in payrolls, but it’s just being completely overwhelmed by Delta.”

The dismal August numbers come as all federal unemployment benefits are set to end on Monday. The left-leaning Century Foundation estimates 7.5 million workers will lose benefits completely, and researchers project that benefits ending could lead to an $8 billion drop in spending. Research has also found ending benefits early had little effect on employment.

Some advocates and politicians have argued it’s too early to end the benefits, but the Biden administration has already affirmed they’ll come to a close on Monday. The administration did say that states could step in to continue to provide benefits with American Rescue Plan funds. So far, none of them are.