No one is returning to work as the economy opens up. It’s great we have more jobs, but it means nothing if no one applies and hired.
I see people celebrating the June jobs report because the economy added 850,000 jobs in June.
Let’s start off with the good news. Employments rose mostly in the leisure and hospitality industries. David Lombardo, general manager of Massachusetts venue Lambardo’s, had to lay off 140 of 148 employees in 2020.
Now Lombardo’s has a long list of events, which means employment! The company hired 40 people so far this year and still needs at least 20 more.
Lombardo’s needs 20 more employees. That number brings us to the numbers buried in other reports: unemployment rate and labor participation rate.
It’s great the economy continues to open, but no one is going back to work.
I know numbers are not sexy, but you have to look at all the details to fully understand the jobs report.
The unemployment rate went up to 5.9% from 5.8%. The long-term unemployed account for 42.1% of the unemployed total in June.
The rates among major worker groups saw little change:
- Adult men: 5.9%
- Adult women: 5.5%
- Teenagers: 9.9%
- Whites: 5.2%
- Blacks: 9.2%
- Asians: 5.8%
- Hispanics: 7.4%
Job leavers (those who leave their job and look for another job) increased by 164,000 to 942,000.
The long-termed unemployed number (without a job for at least 27 weeks) went up by 233,000 to 4 million in June. It went down by 431,000 in May.
Then there’s the labor force participation rate. We have 850,000 new jobs. People have to be aching to get back to work, right?
Well, it changed little in June at 61.6%. Let’s dive into those numbers (their emphasis):
In June, the number of persons not in the labor force who currently want a job was 6.4 million, little changed over the month but up by 1.4 million since February 2020. These individuals were not counted as unemployed because they were not actively looking for work during the last 4 weeks or were unavailable to take a job. (See table A-1.)
Among those not in the labor force who currently want a job, the number of persons marginally attached to the labor force, at 1.8 million, changed little in June but is up by 393,000 since February 2020. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was 617,000 in June, essentially unchanged from the previous month but 216,000 higher than in February 2020. (See Summary table A.)
People living on government handouts realize they can make just as much money staying home have no reason to go back to work. Companies have willingly upped the hourly pay to lure them back to work:
Sung Won Sohn, an economist at Western Alliance Bancorporation, said demand is rising as consumers, flush with cash from wage growth and government aid programs, are boosting spending on services they put off last year. But supply—mainly, workers—isn’t keeping up.
“Employment gains would be much greater if not for labor shortages,” Mr. Sohn said. He thinks those shortages will persist beyond this summer, and perhaps in the medium- and long-term. Mr. Sohn thinks it could take another year or so for the labor market to fully recover from the pandemic.
The average hourly earnings went up by 10 cents to $30.40 in June. April and May saw increases as well.
Others have more demands:
Other workers, with new leverage in a tighter labor market, are demanding not just higher wages but also more worker-friendly conditions, such as the ability to work from home more often, or in cities outside their companies’ home bases. He thinks those factors are already pushing up wages and will persist in the long run—which, while beneficial for many individual workers, could ultimately restrain economic growth. “One of the biggest issues the economy will face is the churning and turmoil in the labor market,” Mr. Sohn said.
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