Pickup in U.S. Employment Complicates Talks on Fiscal Stimulus

The latest U.S. employment gains dispelled pessimism that the jobs rebound is deflating, but also risks delaying a new round of federal aid that’s been a lifeline for millions of Americans and small businesses during the pandemic.

August’s increase in Americans entering the labor market helped drive the unemployment rate down almost two percentage points to 8.4%, better than all economist estimates though still well above the pre-crisis level. Employers added 1.37 million people to payrolls, about one-sixth of whom were temporary workers for the decennial census.

Republicans, who put forth a smaller stimulus proposal than Democrats, took the ...