The economy got a positive progress report Friday with the latest jobs numbers: The unemployment rate dropped a half percentage point from June to July and now sits at 5.4%.
“The share of adults in their prime working years who are employed rose very quickly,” says Aaron Sojourner, labor economist and associate professor at University of Minnesota’s Carlson School of Management. After ticking up to 5.5% last month, that measure, which includes people ages 25 to 54, dropped down to 4.9%.
“It’s really good news,” Sojourner says.
“The report is no doubt positive,” adds Ryan Severino, chief economist at real estate firm JLL. “Not only the number of jobs created in July but [also] the revisions to prior months are a heartening sign.” (Employment numbers are often revised following a release as more data is examined.)
About 40% of the jobs added in July were in the leisure and hospitality sector, which saw a spike in hiring for restaurants and bars.
But it’s clear the economy still has some healing to do to make up for the labor market’s losses last spring. The Bureau of Labor statistics reports 8.7 million people are unemployed. In February 2020, prior to pandemic lockdown orders, about 5.7 million people were out of work.
The pandemic continues to have a disproportionate effect on Black and Hispanic workers and the long-term unemployed. The unemployment rate for Black workers was 8.2% in July and 6.6% for Hispanic (6.6%), compared to 4.8% for white workers. And 3.4 million people have been unemployed for 27 weeks or more, an increase of about a half million over last month.
Although it’s anticipated that the unemployment rate will continue to improve in the coming months, those groups of workers are likely to have a harder time regaining their footing.
Will Variants Set Back Employment Growth?
Although the Delta and other variants could put the kibosh on continued reopening efforts, a few factors are likely to keep the unemployment situation improving over the next few months, says Chris Campbell, chief strategist at corporate risk consulting firm Kroll. Enhanced unemployment benefits are coming to an end, and at the same time, employers are raising wages to attract workers.
“We’re going to see an enormous amount of new people actively looking for work,” he says.
Campbell adds that the much-examined leisure and hospitality sector is fragile and prone to fluctuation as we explore the new normal of a nation that hasn’t exactly embraced vaccination.
“There’s a general sense that the average consumer is not ready nor is willing to go back to a lockdown phase,” Campbell says. And while mask mandates and other restrictions could slow down economic growth, it’s very unlikely to prompt further rounds of federal aid.
That’s where the bipartisan infrastructure package, which is working its way through Congress, comes into play. “Those are multi-year jobs and multi-year projects,” notes Campbell, and that long-term sustainability makes the job creation prospects of the package that much more attractive on both sides of the aisle.
But long-term job growth is likely to grow gradually, now that the dramatic early recovery has leveled off.
“The easy hires are gone,” Sojourner says, referring to rehiring from temporary layoffs. Whether they’re trying to attract and retain workers with higher wages or reliable schedules, “new hires require the worker and employer to learn enough about each other to trust each other.”
Source: “Jobs Report Gets Mid-Summer Boost With Gains in Leisure, Hospitality“
