Economy rallies despite uncertainty
4.8M jobs added in June, but virus darkens the future
WASHINGTON — The U.S. economy added a larger-than-expected 4.8 million jobs in June despite the worsening COVID-19 pandemic, registering solid gains for the second straight month after suffering near-Great Depression losses in the spring, the government reported Thursday.
Reflecting the June increase, the nation’s unemployment level fell to 11.1% after hitting 13.3% in May and 14.7% in April.
President Donald Trump hailed the report as evidence of an economy “roaring back,” and defended his handling of the health crisis. “We didn’t wilt. And our country didn’t wilt,” he said at an impromptu White House press briefing.
While the back-to-back months of improving numbers offered a spot of hope, they may be an uncertain guide to the future. Coronavirus cases, as well as hospitalizations and infections among younger Americans, have been exploding in states across the West and South.
As a result, many areas that were reopening for business and beginning to call back workers are imposing restrictions again.
“This report may be a kind of high point,” said Heidi Shierholz, a former Labor Department chief economist now at the Economic Policy Institute.
Even with the June gains, joblessness overall remains higher than at any time since the Bureau of Labor Statistics’ records began in 1948.
Jobless rates dropped across the board, but disparities remain significant. Black unemployment was 15.4% compared with 14.5% for Latinos, 13.8% for Asians and 10.1% for white people. Unemployment for college graduates was down to 6.9% versus 12.1% for workers with only a high school education.
The Bureau of Labor Statistics said the overall unemployment rate for the nation might actually be 1 percentage point higher than the 11.1% reported due to complications in survey collection. Misclassification of workers’ status had resulted in a much bigger undercount of the unemployed in the prior two months.
Separately Thursday, the Labor Department said 1.43 million people applied for unemployment benefits last week. That was the fourth week in a row in which about 1.5 million workers have filed new jobless claims — six times more than before the pandemic — indicating continued stress in the labor market.
The country overall lost 22 million payroll jobs in March and April, and has now regained about one-third of them. But that doesn’t include millions of workers whose hours have been reduced to parttime and who have dropped out of the labor force because they either don’t see much out there or are staying on the sidelines because of health concerns.
Shierholz expressed concerns that significant portions of the federal government’s pandemic relief package are scheduled to expire in a few weeks, including expanded unemployment insurance benefits.
“We may see we’re losing jobs in coming months,” she said, barring new action by Congress and Trump to extend the programs.
Pandemic-induced layoffs were most concentrated in leisure and hospitality — mainly restaurants and hotels — as well as retail stores and health and social services.
In June, the leisure and hospitality sector added 2.1 million new jobs, or two-fifths of the total new payrolls over the month.
The downturn in jobs started in March with lower-wage service work such as food services, barber shops and movie theaters. But more recently the impact of the pandemic has spread to higher-paying professional and technical work.
One sign of that can be seen in job openings. Since early June, as more local and regional economies reopened across the country, the job search site Glassdoor has seen a solid bounce-back in openings for consumer services jobs including travel and tourism and beauty and fitness.
But job openings in media, information technology, computer software and accounting and legal services have dropped. Consistent with that, Thursday’s jobs report showed employment in computer systems design and related services fell by 20,000.
“As the demand from businesses and consumers decreases, then economic uncertainty increases, and there’s just less demand to actually hire new workers, even in industries where remote work is possible,” said Daniel Zhao, Glassdoor’s senior economist.
Analysts say unemployment might rise in coming months as a result of surging COVID-19 cases, or if people who dropped out of the labor force return to seek jobs, and thus will be counted as unemployed.
In addition, the summer usually brings a flood of fresh college graduates entering the job market — and this year they are stepping into one of the worst job markets in history, said Amanda Stansell, a senior research analyst at Glassdoor.
As of May, she said, the number of open jobs on Glassdoor that contain “entry level” or “new grad” in the job title was down 68% from this time last year.
The unemployment rate for workers 20 to 24 years of age was 19.8% in June, double that for prime-age workers 25 to 54 years old and for older workers.