The trucking company Yellow’s bankruptcy and the ongoing strikes in Hollywood have had a significant impact on the number of jobs added to the U.S. economy in August. While payroll growth would have exceeded 200,000 for the month if not for these events, other indicators in the August report indicate that the labor market is moderating and supply and demand are becoming more balanced.
In August, payrolls increased by a higher-than-expected 187,000. However, this number does not account for the 36,700 jobs lost in the U.S. truck transportation sector, marking the largest decline since the industry faced a loss of 84,500 jobs in April 2020 due to the Covid pandemic. The recent job losses in the sector were primarily driven by the bankruptcy filing of U.S. trucking company Yellow, which led to its closure and left 30,000 people unemployed.
Additionally, there was a decrease of 17,000 jobs in the motion-picture and sound-recording industries in August. The decline was largely due to strikes initiated by the Writers Guild of America and Screen Actors Guild, affecting approximately 16,000 workers, as estimated by the Bureau of Labor Statistics.
According to Glassdoor Chief Economist Aaron Terrazas, if all the striking workers in Hollywood had returned to work, the motion-picture industry would likely have experienced payroll gains instead of losses in August. Terrazas suggests that overlooking these two unique factors related to the transportation and information sectors would have resulted in payroll gains above 200,000—an indication of robust job growth for the U.S. economy.
The Federal Reserve closely monitors monthly payrolls as an economic indicator in its efforts to curb inflation. Stronger jobs reports could potentially sway policy makers to implement more interest rate hikes in the current year. However, despite the one-time setbacks caused by the trucking layoffs and Hollywood strikes, there are clear signs of a slowdown in job growth.
The Bureau of Labor Statistics (BLS) revised down the job growth numbers for June and July by a total of 110,000 positions, further highlighting the deceleration. In August, the three-month moving average of job growth stood at 150,000, down from 201,000 in June, according to Nick Bunker, head of economic research at the Indeed Hiring Lab. Bunker suggests that although there might not be a rapid decline in hiring, the overall trend is downward.
These developments underscore the importance of closely monitoring the labor market and adjusting policies to mitigate the impact on the economy.
Labor Market Faces Volatility as Some Sectors Experience Job Losses
As the labor market cools, certain sectors are expected to suffer more consistently than others, resulting in potentially volatile employment within different industries, explains economist Andrew Bunker. With more moderate growth, there may be an increase in reports highlighting sectors undergoing retrenchment or retreat periods.
The recent job losses in the trucking industry, primarily among former Yellow workers, are indicative of a larger freight recession. While the closure of Yellow accounts for a significant portion of the drop in August, it does not fully explain the entire decrease, according to Bob Costello, chief economist at the American Trucking Associations.
Since the height of the Covid-19 pandemic, there has been a decline in transportation, particularly in the trucking sector, as Americans are receiving fewer goods delivered to their homes. Employment in truck-driving roles has contracted in four out of the past six months as of July, notes Costello.
Furthermore, the American Trucking Association’s seasonally adjusted For-Hire Truck Tonnage Index, which tracks the tonnage hauled by fleets, experienced a 0.8% decrease in July following a 0.3% decline in June.
However, despite these setbacks, truck transportation employment remains 48,000 jobs higher than it was in February 2020 when the Covid pandemic started, according to Julia Pollak, chief economist at ZipRecruiter. This indicates that there may still be a need for further job reductions in the trucking industry to align with the lower demand for goods and the decline in freight costs due to increased spending on services by consumers.
There is a potential silver lining for recently laid-off Yellow workers: driving jobs have held up relatively well. While overall job postings have decreased by approximately 15% compared to the previous year, openings for driver positions have either remained stable or slightly increased. This suggests that some of the affected employees may find new opportunities in the trucking industry. However, it is unlikely that all 36,700 individuals will be rehired in September, cautions Costello.
In summary, the labor market is experiencing volatility, with certain sectors facing consistent job losses. The trucking industry, in particular, has been affected by a broader freight recession, although driving jobs have fared relatively better. It remains to be seen how the industry will adjust in response to changing consumer behavior and economic conditions.
