The U.S. economy gained 850,000 jobs in June. The numbers beat economist expectations and suggest the economic recovery is picking up steam. The unemployment rate changed little at 5.9%. Year-over-year wage growth was at 3.6%.
850,000: The U.S. economy gained 850,000 jobs in June.
5.9%: The unemployment rate rose slightly to 5.9%.
3.6%: Wages rose 3.6% over the past year.
The New York Times reports that June’s job report is another piece of good news about the economic recovery. It is the strongest jobs gain in 10 months and comes after news that consumer confidence surged in June, the stock market closed out the first half of the year with record highs and the congressional budget announced that the U.S. was on track to recover all jobs lost because of the pandemic by the middle of next year.
The most significant gains came in the leisure and hospitality sector, which was the hardest hit by the pandemic. Employers added 343,000 workers to their payrolls in the past month, and those workers saw a 7.1% wage increase compared to this time last year. Wage growth has accelerated in recent months, as employers compete for talent in a market flooded with job openings.
The labor-force participation rate still lags 2% behind pre-pandemic levels, fueling the current labor shortage. The Wall Street Journal reports that many older workers who left the labor force in 2020 have decided to retire, rather than return. Other workers may be dealing with childcare responsibilities, continued concerns over the coronavirus or continuing health problems. Economists say the low participation rate is still holding back the recovery.
Economists are debating the impact several factors are having on the growing economy. Some have argued that enhanced employment benefits are keeping some workers out of the labor force. This has led 26 states to cancel the additional $300 weekly benefit in the hope that it would accelerate job growth. However, data does not show any increase in labor force participation in those states at this point.
Additionally, MarketWatch reports that workers are quitting at record levels – often to take a better paying job. Nearly 1 million people left their jobs in June. Wages have risen 3.6% over the past year, but because wages appeared to rise during the pandemic as lower wage workers were more likely to lose their jobs over higher wage workers, there isn’t much clarity about how quickly wages are rising.