Employers added 850,000 jobs in August, the largest gain since August. The average wage rose by 3.6% compared to a year ago, which is a sign that employers need workers so much they are willing to increase pay.
One glaring omission in the June jobs report was that the unemployment rate actually increased last month. Many economists dismissed this as a technical glitch.
The number of COVID-19 new cases has dropped to below 12,000 per day, despite vaccinations continuing to increase. This is a dramatic drop from the 250,000 reported in January. Businesses are opening more often due to a better health picture. This has encouraged previously cooped up consumers to rush to shops, restaurants and entertainment venues as well as to book vacation flights.
Employers are complaining that they don't have enough workers as they post more job openings than ever before. Economists predict that the demand will gradually outpace the supply. Many Americans are putting off their job search due to persistent health issues, difficulties making child care arrangements, or federal unemployment benefits, which can be temporary. Others are choosing to take a break from work or train for a new career.
The economy is still 6.8 million below the number of jobs it had just before COVID-19 flattened it.
According to Lydia Boussour (senior U.S. economist, Oxford Economics), "It's only time before hiring catches-up with buoyant labor demand." As labor supply constraints slowly dissipate, the economy is poised for a job boom.
Boussour stated that she sees job growth of more than 1 million per month this summer.
In a research note, she wrote that "Let the employment fireworks start."
These are five key takeaways from June's jobs report
TWO STORIES, TWO QUERIES
Employers added 850,000 jobs last month to their workforce, which was a pleasant surprise. Economists predicted that there would be 675,000. The unemployment rate rose from 5.8% to 5.9%, but it remained the same. The number of people reporting being employed dropped by 18,000.
What is the answer?
These contradictory numbers are due to the fact that the Labor Department compiles the monthly job report with two surveys. Sometimes, the two surveys tell different stories. This was evident in June. However, the differences tend to diminish over time.
One survey asks businesses to tell us how many employees they had during the month. This determines how many jobs were created or lost.
Another survey asked households if they have any job. Those who do not have a job but are actively looking for one count as unemployed. Those who don’t want to work are considered employed. This survey determines the unemployment rates.
The household survey is different from the survey of business because it counts farm workers, self-employed, and those who work in start-ups. It does a better job at counting small-business jobs.
However, the survey of businesses has a larger sample and is more accurate than that of households. The Labor Department surveys 145,000 firms and government agencies.
Economists suspect that technical issues might have caused the June household survey to be delayed. Brian Coulton, chief economist of Fitch Ratings, suggests that the fall in Americans employed could be explained by the "challenges of seasonal adjustment" after the huge job losses experienced in 2020.
Many Americans are leaving their jobs to seek better-paying and more fulfilling work because of the hot labor market. In June, 942 000 people were unemployed as they left their previous employer. This was 21% more than the 778,000 reported in May and is the highest monthly such figure since 2016.
Stephen Stanley, chief economist of Amherst Pierpont Securities, says, "Workers clearly understand that they are in control right now and many seem willing to walk away without even having a new job lined up."
The Labor Department reported in an earlier report that 4 million workers had quit their jobs in April. This was the highest recorded figure in records since 2000.
The dramatic swings in the employment market, from a massive collapse in spring 2020 when the coronavirus caused devastating layoffs to a strong rebound over the last year, have created confusion in how the Labor Department calculates its numbers. They also adjust them for seasonal fluctuations.
The department reported that there was a sharp rise in jobs in state, local and private educations as schools were reopened. The department acknowledged that these job gains may have been exaggerated because of the slow transition from remote to in person learning, which "distorted the normal seasonal buildups and layoff patterns."
Joshua Shapiro (chief U.S. economist, Maria Fiorini Ramirez Inc.), cautions that the unexpected and apparently unhealthy decline in weekly hours at private companies is likely due to the difficulties of accounting for those who work remotely.
Shapiro writes that "most people who can work remotely are still doing it at least partially of the time," and "the reliability of these data is likely to be compromised to some extent."
ALL RACES HAVE HIGHER UNEMPLOYMENT
Last month, the unemployment rate rose by 0.1 percentage points for both black and Hispanic workers. Whites are currently at 5.2%, Hispanics at 7.4%, and Black Americans at 9.2% unemployment.
Despite steady job growth in the United States, the lingering effects of the coronavirus recession are still affecting Americans of all races. Nearly 6.5 Million whites were out of work in June. This is an increase by 2.6 million (or 67%) from February 2020 when the virus was first reported. The number of people without jobs has increased by 53% to as high as 1.9 million among African Americans, and 65% to as high at 2.2 million among Hispanics.
BACK TO THE CUBICLE
As the virus subsides and businesses reopen their doors, Americans are more likely to pack up their laptops and leave temporary offices in the kitchen before returning to their jobs.
According to the Labor Department, the percentage of people who telework dropped to 14.4% in June from 16.6% in May. This is down from 35.4% in May 2020. These figures include all people who have worked remotely in the past four weeks.
Businesses that are located in downtown offices and restaurants catering to weekday commuters anxiously await to see if the work-from home trend holds once economic life is back to normal. Many companies have told employees that they expect hybrid systems in which their employees can work remotely on specific days.