Minnesota financial expert talks about modest gains in latest jobs report, why it’s happening

“The problem is the unknown variable, and it’s the delta variant,” US Secretary of Labor Martin Walsh told 5 EYEWITNESS NEWS. “The delta variant is one, and number two is really – it’s the lack of child care concern, lack of child care.”

The government released its new jobs report on Friday. Among the main conclusions:

  • Employers added 235,000 jobs in August,
  • The unemployment rate fell from 5.4% to 5.2%,
  • Average hourly wages rose 4.3% in August from a year earlier.

But that number of new jobs fell far short of the gains in June and July.

The government claims that around 1 million jobs have been created each month.

Those gains in June and July followed widespread immunizations that allowed the economy to fully reopen after pandemic restrictions.

President Joe Biden blamed the variant for the modest gains in the latest jobs report.

“There is no doubt that the delta variant is the reason why today’s jobs report is not stronger,” said the president. “I know people were looking, and I was hoping for a higher number.”

So what is going on?

“There is a certain percentage of the population who are quite afraid of any variation,” said Dave Vang, a financial expert at the University of St. Thomas.

Vang says there are two big issues at work here. With schools closing, daycares keep workers at home and others have health problems, he says.

“The fear of the variant is part of it, but I think the majority of what we see is just that kind of disconnection,” he explained. “The chicken and egg problem, which some industries are really anxious to solve, but they depend on another industry where things are tight.”

It is a standoff for the supply of labor.

Vang is pointing the finger at the auto industry, with cars ready to sell but no microchips to put in. Or the construction industry, which, according to him, lacks several thousand jobs, even as wood prices are falling.

“The variant plays it,” he said. “But a lot of different industries are trying to catch up, so things can really get going.”

Experts say the variant prevents people from activities like stealing, shopping, and dining out. But Vang says there are bright spots.

He sees the government’s shutdown next week of federal unemployment benefits of $ 300 per week as a sign of confidence.

The move comes as the Federal Reserve plans to reduce its support for the U.S. economy later this year.

“The Federal Reserve says we think this really high easy money stuff can start to go down, they call it a cone,” Vang said. “It’s actually a sign that I think the Federal Reserve thinks things are going to work out.”

He sees something else that he hopes will boost the economy: Schools in Minnesota and across the country are reopening, allowing some parents to re-enter the workforce.

“This is why it is so important, at least for the economy, that schools open, because we have had a lot of parents who at least one or both stay at home with the children because there is no had no place to go for them, ”Vang says.

But there is a flip side.

Vang says if your kids are under school age, it might be difficult to find caregivers with openings.

Yet even the government says reopening schools will help the economy recover.

It could take several months, Vang says, because businesses are so interconnected.

“Both employees and employers will factor into their risk calculations that, yes, we can get back to normal,” he said. “There’s a lot of pent-up demand out there. It’s another light in the tunnel.”

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