Weak jobs report coincides with expiring jobless aid for millions of workers

Today's weak jobs report and the pending expiration of pandemic-era unemployment programs this weekend are spurring urgency among economists and advocates on the need to extend coverage keeping millions of Americans and their families afloat as the delta variant spreads.

The U.S. economy added just 235,000 jobs in August, far below the expected 720,000 positions and a fraction of the nearly 1 million roles added in July.

Economists say the delta variant's surge is leaving its mark on both the ability of businesses to hire, as well as people's ability to work.

Delta variant impacts hiring

Covid cases increased five-fold during the mid-August reference week compared to July, Economic Policy Institute senior economist Elise Gould tells CNBC Make It, "so I'm not surprised we saw the labor market didn't grow as fast."

With the delta surge, states and businesses are reimplementing Covid safety measures, like cutting back on indoor dining, which could slow operations and therefore hiring.

The leisure and hospitality sector, which has been driving job growth for the past six months, stalled in August. The retail sector lost 29,000 openings, with the majority coming from food and drink establishments.

Sectors that gained jobs in August include professional and business services; transportation and warehousing; private education; and manufacturing and other services.

Recovery isn't helping everyone

August also saw an increase of about 400,000 people who said they couldn't work due to pandemic-related reasons, pushing the total up to 5.6 million.

Meanwhile, more than 12 million people were collecting unemployment insurance as of mid-August, including 5.4 million under Pandemic Unemployment Assistance (which supports freelancers, gig workers and caregivers), 3.8 million under Pandemic Emergency Unemployment Compensation (for the long-term unemployed) and 2.8 million receiving traditional benefits, who will lose the $300 weekly enhancement after Labor Day.

A projected 7.5 million workers will lose access to benefits altogether when they expire September 6, according to The Century Foundation, a left-leaning think tank.

While the overall unemployment rate dropped slightly to 5.2% in August, the rate of unemployment among Black workers rose in August to 8.8% from 8.2% in July. The unemployment rate for Hispanic and Latino workers also remains above-average at 6.4%.

"Recovery has not hit people equally by race or ethnicity," says Gould, who says the higher-than-average Black and Latino unemployment rates are "moving in the wrong direction" compared to the jobless rates for white and Asian workers, which sit at 4.5% and 4.6% respectively.

The end of benefits will impede economic growth overall, she adds, as federal jobless aid has stimulated labor market growth in the last year.

The expiration of the federal programs is expected to result in an immediate decrease of $5 billion in spending from the economy each week, according to a statement from Andrew Stettner, a senior fellow at The Century Foundation.

Urgent calls to extend unemployment benefits

Federal pandemic UI programs "were created to help people stay afloat when it was simply not safe to be working in person," says Gould. She says August job numbers "emphasize the importance of continuing to provide a safety net for workers and their families by not dropping [them]."

Grassroots organizations like Extend PUA are calling for individuals to put pressure on their local legislators to extend jobless aid.

From the onset of the pandemic, worker advocacy groups have called to make temporary programs such as PUA and PEUC permanent in order to address the vulnerable and marginalized workers left out of traditional unemployment insurance systems. Americans most likely to be supported through PUA and PEUC — the long-term unemployed, self-employed, freelancers, gig workers, part-time workers and caregivers — are also disproportionately Black, Hispanic, Asian, women and low-income earners.

The Biden administration previously called on states to use emergency coronavirus funds to provide additional benefits to millions across the country still out of work. But many state labor departments confirmed they have no intention of extending or providing additional benefits on their own. 

The administration has made its stance clear that it is "appropriate" for the emergency federal program to end, but The Washington Post reports senior officials across multiple parts of the government "have made clear they think the benefits cliff poses a serious danger to millions of Americans who remain out of work."

On Friday, President Biden blamed the spread of the delta variant for the weaker-than-expected jobs report, and stressed ramping up vaccination efforts.

The White House is expected to announce new strategies next week to combat the spread of the delta variant in schools and businesses.

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Millions will lose pandemic unemployment in September—many have already been cut off

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