Jobs report offers a glimmer of good news as hiring ticks higher in September

To be sure, some good news emerged from the September jobs report Thursday from the state Labor Department. The region added 1,400 jobs from August to September, and that pushed the number of jobs in the region to its highest level since April.

But when factoring in the softness in hiring throughout the spring and summer, that still means the region essentially hasn’t added any jobs since the beginning of the year – during a period the number of jobs across the country grew by 1%.

“It’s a more sizable increase, but I’d still say we’re only seeing these minor changes over the past 10 months,” said Julie Anna Golebiewski, a Canisius University economist.

In other words, stagnation.

“There’s a softening of the labor force and a softening of the labor market in general,” said Timothy Glass, the Labor Department’s regional economist in Buffalo.

Glass thinks a lot of the softness stems from the Buffalo Niagara region’s longstanding people problem. Simply put, we don’t have enough of them, especially now that Census Bureau estimates show the region slowly losing population again since the beginning of the decade, reversing some of the gains during the 2010s.

The result is a shrinking labor force, which makes it harder for companies to find all the workers they want to hire. That increases the competition for the workers who are available, pushing up wages, and also prodding companies to look for alternatives, including ways to replace people with automation.

“There’s still plenty of companies looking for workers,” Glass said. “There just aren’t enough bodies out there right now.”

There also are concerns that the monthly job numbers may be overstating the strength of the local job market, at least during the beginning of this year.

More detailed and accurate figures based on extensive employment records filed with the federal government show that the region’s job gains during the first three months of this year were roughly two-thirds lower than the monthly data indicated.

Instead of adding jobs at a 2% annual pace during the first quarter, as the monthly data indicated, the more detailed figures peg that job growth at just 0.7% during that time.

That may be a sign the monthly job numbers – which show the region still down about 4,500 jobs since the pandemic – are too optimistic and could be revised downward early next year. Golebiewski thinks the monthly figures could be revised downward by as many as 5,000 jobs, which would put the region’s job shortfall since the pandemic at almost 10,000 – double the current estimate.

“It changes the story,” Golebiewski said.

The stagnant hiring also means a wider gap between how the rest of the country is doing compared with the Buffalo Niagara region.

The nation recovered all the jobs lost during the pandemic two years ago and has seen 4% job growth since then. The Buffalo Niagara region, on the other hand, never got back to where it was before the pandemic and the latest sluggishness in hiring has allowed the nation to pull away even further.

Some parts of the region’s job market are doing better than others. Manufacturing has been a bright spot, with nearly 5% more jobs than before the pandemic. Transportation and warehousing also has been strong, growing by 14%. Professional and business services are up by almost 3%.

But leisure and hospitality jobs – perhaps the hardest-hit sector by the pandemic – are down by nearly 8%. Financial services jobs are off by almost 2%.

Keep in mind that jobs reports treat all jobs the same. A CEO job that pays $300,000 counts as one job. So does a part-time job paying minimum wage.

So there’s a stark contrast between the leisure and hospitality sector, where the average weekly wage is roughly half of the regional average, and the 2% drop in financial services jobs, where the average weekly wage is 50% higher than the regional average of $1,293.

With workers getting bigger raises coming out of the pandemic, the total earnings of workers in the Buffalo Niagara region already has surpassed its pre-pandemic level by about 2% after adjusting for inflation.

That’s especially good news, because that means workers here have more money to spend, and that consumer spending accounts for about 70% of all economic activity.

It takes some of the sting out of the sluggish rebound in hiring, although the stronger job growth across the country – where the population is growing – also means that other places are getting an even bigger bump from rising wages, because there are about 4% more paychecks being issued than before the pandemic.

But even if companies aren’t hiring all that much, they’re also not cutting back.

The number of workers filing for unemployment benefits for the first time – a timely measure of layoffs – has been fairly stable at levels that are historically low for the past two months. And the jobless claims are also in line with where they were at this time last year, according to an analysis of state Labor Department data.

The September update on unemployment will not come until Tuesday, but the slowdown in hiring also hasn’t been accompanied by an increase in unemployment. The region’s jobless rate was 4.3% in August, and it’s been remarkably steady since last December, fluctuating from a low of 4.1% to a high of 4.3%, the Labor Department says.

While there’s been a modest rise in the number of unemployed people – up 600 since December – the biggest change is the region’s shrinking pool of workers, which has contracted by more than 13,000 people, or a little more than 2% since last December.

Glass thinks the labor force data may be overstating the decline but not enough to reverse the downward trend.

Which takes us back to the people problem.

“That tells me the retirees are outpacing the people entering the labor force in this area,” Glass said.

And fewer workers rarely translates into more hiring.