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Slow September Job Growth; Ending UI Benefits Didn’t Boost Employment

October 22, 2021 by Christopher Meyer in Blog, Economic Opportunity, The COVID-19 Pandemic and Maryland's Economy

Maryland’s labor market stagnated in September, according to data released Friday by the Bureau of Labor Statistics. Our unemployment rate stood at 5.9% (seasonally adjusted), statistically indistinguishable from the August unemployment rate of 6.0% and significantly higher than the 4.8% national unemployment rate.

There are three main takeaways from the new jobs data:

  • While we have made considerable progress since the worst of the pandemic-induced downturn in 2020, our economy is not yet out of the woods.
  • With 186,000 Marylanders currently unemployed—actively looking for a job but unable to find one—our state’s workers are still facing significant hardship and need ongoing support to stay afloat.
  • The expiration of federal enhanced unemployment benefits on Labor Day did nothing to draw people into jobs. In fact, fewer than 1,000 Marylanders entered the labor force* in September, only 10% as large as the July and August increases.

* The labor force refers to people who are either employed or looking for work (unemployed).

Friday’s jobs data in context:

  • Maryland’s unemployment rate averaged 3.5% in 2019. With today’s labor force, a 3.5% unemployment rate would correspond to 109,000 unemployed workers. In other words, there are 76,000 unemployed workers in Maryland who would not be unemployed if our economy were running at full capacity.
  • Our unemployment rate hit a high of 9.0% in April and May 2020. The current unemployment rate puts us 56% of the way “down the hill” from this peak to our 2019 average unemployment rate.
  • The Bureau of Labor Statistics estimates that Maryland added about 3,100 jobs in September, but this estimate is imprecise and not statistically distinguishable from zero. While this estimate should be treated with caution, it indicates that September job growth was only half as strong as August job growth and a quarter as strong as July job growth. This provides further evidence that taking away unemployment benefits did not help the economy.

Policymakers should use the state’s surplus to help workers and families. The state closed the 2020–2021 budget year with a massive $2.5 billion surplus, despite continuing hardship among Maryland families. To keep the state on a path to recovery, should use this money to strengthen unemployment benefits, help struggling renters avoid eviction, and make sure everyone has food on the table and cash to spend at local businesses.