The Massachusetts job market extended its recovery from the pandemic-induced shutdown earlier this year as employers added workers for the fourth consecutive month in August and the unemployment rate declined sharply, the US Labor Department said Friday.
The state’s jobless rate fell to 11.3 percent last month from a revised 16.2 percent in July, when it was the highest in the country. Employers added 51,600 jobs, led by hiring in health care and education, as well as the leisure and hospitality sector, which was pummeled during the early months of the coronavirus pandemic.
The brightening jobs picture mirrored improvements seen at the national level. US employers created 1.4 million jobs in August, and the unemployment rate fell to 8.4 percent from 10.2 percent in July.
But the outlook for the Commonwealth — like that for the country — is uncertain. The pace of hiring has cooled after an initial surge, when restaurants, stores, construction sites, and factory floors began to reopen in May. Moreover, the ranks of people who want a job but can’t find one remain massive by historical standards: 401,000 in Massachusetts last month, more than double a year earlier. And the workforce is shrinking as some job-seekers give up their search.
“There are still enormous numbers of people out there who are suffering and can’t find the work,” said Thomas Kochan,a professor at the MIT Sloan School of Management and codirector of its Institute for Work and Employment Research.
Governor Charlie Baker’s decision to shut down earlier than most states — and reopen more cautiously — slowed the spread of the coronavirus, but that success came at a high price: The state had the steepest unemployment rate in the country in June, when it peaked at 17.7 percent, and in July. The rate was 2.8 percent in March, below the national average.
Now the recovery in Massachusetts is catching up with other parts of the country. The percentage-point drop in unemployment here was the biggest among states, and the 1.6 percent increase in jobs was near the top.
Tourist-dependent Nevada now has the highest unemployment rate in the country, at 13.2 percent. Not far behind was Rhode Island, where the rate actually rose to 12.8 percent. Despite the big drop here, Massachusetts ranked sixth highest in unemployment in a tie with New Mexico, while Nebraska, at 4 percent, had the lowest ratio of out-of-work residents in the country.
While widely followed, the unemployment rate — which is based on a household survey that is prone to substantial revisions from month to month at the state level — is just one way to track the health of the job market and doesn’t provide a complete accounting.
Each week the Labor Department releases a tally of people collecting state unemployment insurance. The number of Massachusetts residents receiving these payments has fallen from a record of nearly 600,000 in late March to 419,000 in the week ended Aug. 15 — the same week covered by the August jobless survey.
A broader — and less rosy — count of Massachusetts residents who are out of work is now possible with the start of a new federal emergency program for gig workers, independent contractors, and others who were previously ineligible for state benefits. An additional 480,000 laid-off workers in Massachusetts received federal Pandemic Unemployment Assistance for the week ended Aug. 15.
The counts of those receiving the pandemic aid have not been as precise as those for state unemployment because of inconsistencies tied to the rollout of the program and a wave of bogus claims. Still, under federal and Massachusetts programs combined, somewhere close to 900,000 people received unemployment in the week of Aug. 15, or nearly one-fourth of the pre-pandemic labor force.
Other employment measures also underscore the fragility of the local economy. The labor pool — people with jobs and those looking for work — shrank last month by 127,600 to 3.55 million as would-be workers gave up efforts to land a paycheck. The labor force participation rate — the share of working-age population employed and unemployed — fell for the fourth time in six months and stands at 62.6 percent, compared with 67.9 percent in February.
Hiring is being driven by companies bringing back workers who were furloughed or fired earlier in the year. Employers in education and health services added 17,400 jobs in August, though the sector remains down 60,700 jobs over the past year. The leisure and hospitality industry expanded by 13,100 jobs, but the year-over-year decline was a staggering 146,000 positions, or 39 percent of the total.
“My sense is that the movement is a lot of people getting called back. Finding a new job is still hard,” said Andrew Stettner, who studies the labor market as a senior fellow at the Century Foundation.
The key question is whether Massachusetts employers will pick up hiring now that COVID-19 infection rates are among the lowest in the country and expanded jobless benefits have run out. The state has clawed back about 40 percent of the 690,000 jobs that were cut in March and April.
“We need more support,” Stettner said, referring to the failure of Congress to agree on a new financial rescue package. “We are in a very deep hole for the next nine months or a year.”