Economy adds more jobs in June even as hiring slows
(Colorado Newsline) Although hiring inched down in June, the U.S. labor market is still showing signs of strength, with unemployment falling and earnings continuing to rise, the latest jobs report from the U.S. Department of Labor showed.
The economy added 209,000 jobs as the unemployment rate fell to 3.6 percent from 3.7 percent in May.
“In excess of 200,000, you’re easily pulling more workers off the sideline and you’re keeping up with the population growth. It’s strong. It’s not hot but it’s also not cool. I think we’re in a good place right now,” said Elise Gould, senior economist at the Economic Policy Institute.
The employment to population ratio, which the World Bank considers an indicator of how efficiently the economy supplies jobs for people who want to work, was 80.9 percent for people 25 to 54 years old, the highest it’s been in more than 20 years. Women’s employment to population ratio was 75.3 percent, exceeding its high before the pandemic of 74.6 percent.
“That hit another series high,” Gould said of women’s employment to population ratio. “It’s been high for a couple of months and now it’s hit a new high, the highest on record … That’s back to 1948. I think that’s a really important milestone that’s been reached.”
She added, “Men also did see improvements. They’re narrowing their deficit from [before the] pandemic, but they just haven’t hit it yet.”
Employment in federal, state, and local government shot up by 60,000 in June and by 56,000 in May, which is notable for a sector that has been slow to recover from the pandemic. It has added 63,000 jobs per month on average this year compared to 23,000 each month in 2022. Although this job growth is a positive sign, the government would need to add 161,000 more jobs to meet its February 2020 level.
“I think what’s really important about the public sector especially is that it’s a uniquely good engine for upward mobility, especially for workers who are discriminated against or have a hard time finding jobs in the private sector,” said Dr. Chris Becker, senior economist and associate director of policy and research at Groundwork Collaborative. “The public service sector provides really important services. We value these jobs because they’re really useful to society as well.”
Gould said, “The gap that I’ve been most concerned about [in the public sector] is state and local jobs and that’s where most of the gains have happened, not only in June but also in May and in April.”
Average hourly earnings increased by 12 cents to $33.58 and over the past year those earnings rose by 4.4 percent. Economists say these gains have been particularly important for low-wage workers who have had more leverage in this economy.
Becker said that wages have improved because of policy choices made since the pandemic such as the American Rescue Plan and expanding the child tax credit.
“We really put a lot of money in people’s pockets and this led to a really strong labor market which has led to a lot of job opportunities and that’s really benefited people at the bottom of the income distribution the most,” he said. “Over the last couple years, we’ve seen really strong wage growth, especially for those workers at the bottom.”
Gould said workers have found leverage through switching jobs and getting on a new career path. The pandemic government support made them less desperate to take the first job that was available to them, she said.
“Those are all certainly promising signs. My caveat to that is that it’s been decades of very slow wage growth for those workers, and so it certainly puts a dent in those kinds of losses or that rise in inequality, but the wage levels are still quite low,” she said.
According to a ADP Research Institute and Stanford Digital Economy Lab report, private sector employment shot up by 497,000 jobs in June, which was much higher than median economist expectations from a Bloomberg survey. ADP, a payroll service provider, often has different data than the Bureau of Labor Statistics because its employment information comes from payroll transactions while the BLS data comes from surveys. The June data found that the five highest annual pay changes in the U.S. were in Wyoming at 9.5 percent, Montana at 9.3 percent, Oregon at 8.4 percent, Idaho at 8.1 percent, and New Mexico at 8 percent.
Still, economists said the unemployment rate for Black people in June is concerning at 6 percent from 5.6 percent in May and 4.7 percent in April. The April unemployment data marked the first time since the Labor Department began collecting the data that the unemployment rate for Black workers dropped below 5 percent. The unemployment rate for 16- to 19-year-olds was 11 percent up from 10.3 percent in May and 9.2 percent in April.
“We know that Black workers face rampant discrimination in the labor market,” he said. “We know that they generally are the last hired and first fired and so they’re going to be the ones who are disproportionately going to bear the brunt of whatever policy choices we make to try to slow down this labor market.”
Becker said that he believes that the Federal Reserve’s interest rate increases, which it just decided to pause a few weeks ago, are undoing some of the progress made in narrowing the gap between the unemployment rate for white workers, which was 3.1 percent in June, and the unemployment rate for Black workers. The Fed has indicated that it may resume raising interest rates this year in its quest to reduce inflation.
“I can’t predict what the Fed will do but the labor market is not hot,” Gould said. “It’s strong, but inflation wasn’t and isn’t coming from the labor market so the Fed should keep pausing. The labor market has been resilient so far to interest rate hikes, but they operate with a long lag so it’s too soon to tell.”
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