Popular Economics Weekly

Market Watch

We should be wishing everyone a Happy July Fourth, with the Bureau of Labor Department’s June unemployment report. Workers’ wages in the service sector are rising, with 850,000 new nonfarm payroll jobs added to the labor force.

Even better news is wages are rising where most needed, in the lower paying service sector. The June jobs report showed a 2.3 percent month-over-month increase in average hourly earnings in the leisure and hospitality industry. Overall average earnings rose 0.3 percent last month.

“Job gains should pick up in coming months as vaccinations rise, easing some of the pandemic-related factors currently weighing them down,” Federal Reserve Chair Jerome Powell told Congress on June 22.

So there is a way to go to return to the full employment experienced before COVID-19, said the BLS:

“Both the unemployment rate, at 5.9 percent, and the number of unemployed persons, at 9.5 million, were little changed in June. These measures are down considerably from their recent highs in April 2020 but remain well above their levels prior to the coronavirus (COVID-19) pandemic (3.5 percent and 5.7 million, respectively, in February 2020).”

The separate Household Survey reported the number of persons employed part time for economic reasons decreased by 644,000 to 4.6 million in June. This decline reflected a drop in the number of persons whose hours were cut due to slack work or business conditions.

And the number of persons not in the labor force who currently want a job was 6.4 million, little changed over the month but up by 1.4 million since February 2020. These individuals were not counted as unemployed because they were not actively looking for work during the last 4 weeks or were unavailable to take a job.

This can give us an idea of the huge size of our labor force, with more than 5 million jobs created each month, and 9 million jobs waiting to be filled, due to the sudden surge in economic activity. It is a reminder that we were at full employment in February 2020.

In fact, 6.2 million persons reported in June that they had been unable to work because their employer closed or lost business due to the pandemic—that is, they did not work at all or worked fewer hours at some point in the last 4 weeks due to the pandemic.

Reuters reports, “the underlying theme in the labor market outlook will continue to be that the jobs recovery is being held back by a shortage of willing workers rather than lack of employer demand.  The “jobs-plentiful” index in Tuesday’s consumer confidence report from the Conference Board surged to a 21-year high.  In yesterday’s NFIB small business jobs report, 46% of firms on a net basis reported that they had vacancies they were unable to fill.”

Well, as President Biden said in a recent aside to reporters: “Pay them more!”

We might be returning to a time when the pay gap between high-school and college-educated workers was much less. It has happened before, so a Happy Fourth and better times ahead, maybe.  

Harlan Green © 2021

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