Northwest Arkansas Democrat-Gazette
June’s jobless rate sits at 11.1%
Drop reflects added jobs, but business closings continue
WASHINGTON — U.S. unemployment fell to 11.1% in June as the economy added a solid 4.8 million jobs, the Labor Department reported Thursday, but a surge in new infections and a spate of new closings threatens the nascent recovery.
While the jobless rate was down from 13.3% in May, it is still at a Depression-era level. And the data was gathered during the second week of June, just before a number of states began to reverse or suspend the reopenings of their economies to try to beat back the virus.
“This is a bit of a dated snapshot at this point,” said Jesse Edgerton, an economist at J.P. Morgan Chase.
The new surge in infections has led states such as California, Texas, Arizona and Florida to re-close or otherwise clamp down again on bars, restaurants, movie theaters, beaches and swimming pools, throwing some workers out of work for a second time.
Another 1.4 million Americans applied for unemployment insurance for the first time last week, and more than 19 million people are still receiving unemployment benefits, stubbornly high levels that show how many people are struggling to find or keep work.
At 11.1%, unemployment is down from a peak of 14.7% in April but still far above the 3.5% level notched in February.
The Congressional Budget Office on Thursday said the coronavirus pandemic gave such a shock to the labor market that it would not fully recover for more than 10 years.
President Donald Trump touted the jobs that were added at a news conference called shortly after they were released, saying they were a sign that “America’s economy is now roaring back to life like nobody has ever seen before.”
“All of this incredible news is the result of historic actions my administration has taken,” Trump said.
Democratic presidential
candidate Joe Biden responded, “Just like last month, President Trump has spiked the ball and made this about him. He doesn’t seem to realize he’s not even on the 50-yard line.”
Economists expect the recovery to take longer than Trump’s optimistic projections, with the unemployment rate likely to be near doubledigit levels by year’s end.
“Even as we move into the second half of the year, a large number of people will still be looking for work,” said Eric Winograd, senior U.S. economist at asset manager AllianceBernstein.
The shutdowns over the past two weeks will be reflected in the July unemployment report, to be released in early August.
While the job market improved in June for a secondstraight month, the Labor Department report showed that the U.S. has recouped only about one-third of the 22 million jobs lost during the lockdowns this spring.
U.S. job growth in June was driven mainly by companies recalling workers who had been laid off during the widespread business shutdowns across the country.
In an ominous trend contained in the Labor Department report, the number of Americans who said they had lost their jobs permanently rose by 600,000 last month to nearly 2.9 million.
Many businesses, particularly small ones, are shutting down for good even though the lockdowns have largely been lifted.
Erik Hurst, an economics professor at the University of Chicago, said many restaurants, bars and gyms can’t survive by operating at half-capacity, and customers are going to be cautious until there is a vaccine.
“We don’t want to get our hair cut as much as we used to,” Hurst said. “We don’t want to go out to eat as much as we used to.”
Fred Wellman’s five employees are getting their final paychecks today as he closes his public relations firm, ScoutComms. He was able to get a small-business loan from the government, but it wasn’t enough.
He usually drums up most of his business at conferences, seminars and other in-person events. But “if people aren’t meeting in person, if people aren’t holding events, you don’t get a chance to mingle,” he said.
The job gains of the past two months have partly resulted from unprecedented levels of government spending, including $1,200 relief checks, more than $500 billion in grants to small businesses, and an extra $600 a week in unemployment benefits.
Those payments enabled millions of Americans to cover the rent and other bills. Yet those programs are expiring or tailing off. The additional $600 in unemployment ends July 31.
“We could see a huge cliff,” said Julia Pollak, labor economist at ZipRecruiter. “Those expanded benefits will expire before new hiring has really picked up.”
Congress is debating another relief package. Treasury Secretary Steven Mnuchin said Thursday that he supports something that is “much more targeted” to businesses that need it.
Hotels, restaurants, bars and casinos added 2.1 million jobs last month, the most of any industry. Retailers gained 740,000.
While unemployment fell in June for all groups, it dropped faster for whites than for Blacks or Hispanics. The rate among white people was 10.1%. Black unemployment fell to 15.4% from 16.8%. Among Hispanics, unemployment dropped to 14.5% from 17.6%.
Information for this article was contributed by Christopher Rugaber of The Associated Press; and by Eli Rosenberg, Heather Long and Jeff Stein of The Washington Post.