The labor market had strong momentum in June, but faces fierce headwinds as COVID-19 cases rise.
Here are eight things to know about the jobs report and jobless claims report released today:
- 2.27 million initial jobless claims were filed last week (including state and federal unemployment benefits). That means more people are being added to unemployment rolls each week than the economy added all year in 2019. After steady improvement in April and May, the decline in new claims stalled in June.
- Despite signs that layoffs remain elevated, the June jobs report was strong overall. The large reduction in the unemployment rate from 13.3% to 11.1% is highly encouraging. So is the 1.5 million (14.5%) decline in the number of people working part-time for economic reasons. With many employers bringing workers back on reduced schedules, that number was widely expected to rise.
- The number of workers on temporary layoff declined by 4.8 million or 31% in June after falling 15% in May. That suggests workers are being recalled to their jobs in large numbers as economic activity increases around the country.
- Sadly, the number of “permanent job losers” continued to rise, growing by 588K or 26% to 2.9 million. With so many people being permanently laid off at once, the labor market is becoming intensely competitive for job seekers.
- The unemployment figures do not capture the full extent of the labor market disruption wrought by the coronavirus pandemic. The labor force has declined by 4.6 million since February. It could take years for workers who have given up on finding jobs to come back off the sidelines.
- We should also remember that the crisis has affected some groups of workers more severely. The unemployment rate for workers in service occupations is 18.8%. And while employment levels rebounded 3.8% for white workers and 6.3% for Hispanic workers, they only rose 2.4% for black workers.
- While leisure and hospitality, retail, construction and manufacturing recalled large numbers of workers, there are still many industries shedding jobs. Those include state government (-25.0K), computer systems design and related services (-20.4K), nursing and residential care facilities (-20.1K), local government excluding education (-13.8K), mining and logging (-10K), travel arrangement and reservation services (-7.6K), and air and rail transportation (-6.1K).
- The labor market may have deteriorated since the reference week in the report. The number of new jobs posted on ZipRecruiter plummeted 51% in April, rose 14% in May, but declined in June—a sign that the hiring outlook for July remains deeply uncertain.
While recent job gains are great news for businesses and job seekers, the total number of nonfarm payroll employees is still 14.7 million lower than it was in February before the COVID-19 crisis struck. In a briefing on today’s employment figures, Larry Kudlow, Director of the National Economic Council, celebrated the partial recovery but added: “there’s still a lot of hardship, a lot of heartbreak in these numbers.” There is still a lot more work to do to get America back to work safely.
