As politicians like to do, President
is taking credit for the 850,000 net new jobs that the Labor Department said Friday were added in June. “None of this happened by accident,” he said. “It’s a direct result of the American Rescue Plan.”
He’s right it’s not an accident. It’s the result of the economy reopening in more states, but the jobs recovery would be faster without the $1.9 trillion spending bill Democrats passed this spring.
The top-line number beat most estimates with private employers adding 662,000 jobs. A big bump was to be expected after states lifted almost all of their business restrictions. Vaccines last month were widely available, and people exhausted by lockdowns have been eager to go out. Reservations on OpenTable in many states are higher than the same time in 2019.
Most jobs added last month were in industries that reopened, especially leisure and hospitality (343,000), state and local education (229,700) and retail (67,100). The household survey was more pessimistic and showed unemployment increased by 168,000, which caused the jobless rate to tick up to 5.9% from 5.8%.
While the household and establishment surveys don’t always match, last month’s disparity appears to be due in part to the huge increase in part-time work (408,000) and decline in reported self-employment (183,000). These differences tend to re-align over time.
By now anyone who wants a job can get one. Yet employment is still 7.1 million lower than in February 2020 while the Labor Department’s Jolts report showed 9.3 million job openings in April. The $300 federal unemployment bonus, which Democrats extended through Labor Day, allows many workers to earn more not working—and for up to 99 weeks in some states.
As a result, many workers are picky about which jobs they take, which San Francisco Federal Reserve President
says is good. Not for many businesses and their customers. Ninety-four percent of nursing home providers said they had staffing shortages in the last month, and the industry continues to shed workers.
The reply is that businesses can merely increase wages, but most are doing exactly that. Many are offering bonuses for new hires. Average hourly wages increased 10.4% for production-level retail and 28% for leisure and hospitality workers at an annual rate.
recently announced a $1,000 signing bonus to recruit cooks who earn $18 per hour for its Florida theme parks.
As businesses bid up wages, more workers are quitting for higher-paying jobs. The number of workers who voluntarily left their jobs to look for other work increased by 164,000 to 942,000. High worker turnover makes it hard to run a business, and the labor shortage is causing supply-chain problems and pushing up prices. Inflation has eroded wage gains in recent months.
The jobs recovery was always going to accelerate as the pandemic eased, and the labor market will recover faster as the $300 bonus for not working ends. Twenty-six states have either stopped accepting the bonus or soon will. The economy’s problem now isn’t too little work. It’s too few workers willing to do the work.
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8