June brings jump in jobs, pickup in pay


In an encouraging burst of hiring, America’s employers added 850,000 jobs in June, well above the average of the previous three months and a sign that companies may be having an easier time finding enough workers to fill open jobs.

Friday’s report from the Labor Department was the latest evidence that the reopening of the economy is propelling a powerful rebound from the pandemic recession. Restaurant traffic across the country is nearly back to pre-pandemic levels, and more people are shopping, traveling, and attending sports and entertainment events. The number of people flying each day has regained about 80% of its pre-COVID-19 levels. And Americans’ confidence in the economic outlook has nearly fully recovered.

The report also suggested that American workers are enjoying an upper hand in the job market as companies, desperate to staff up in a surging economy, dangle higher wages. In June, average hourly pay rose a solid 3.6% compared with a year ago — faster than the pre-pandemic annual pace. In addition, a rising proportion of newly hired workers are gaining full-time work, as the number of part-time workers who would prefer full-time jobs tumbled — a healthy sign.

“That underscores the growing bargaining power of labor,” said Joe Brusuelas, chief economist at RSM, a tax advisory firm. “There’s increasing confidence that they’re going to get better jobs at better wages as the U.S. economy expands.”

Speaking at the White House, President Joe Biden touted the job gains and suggested that his economic policies, including a $1.9 trillion economic relief plan that was enacted in March, were intended to make it easier for workers to find higher-paying jobs.

“The strength of our recovery is helping us flip the script,” Biden said. “Instead of workers competing with each other for jobs that are scarce, employers are competing with each other to attract workers.”

The Republican National Committee responded by noting that job gains have been stronger in Republican-run states, where governors have moved to cut off a $300-a-week federal unemployment payment to try to prod more people to seek jobs.

Friday’s report showed that the unemployment rate rose from 5.8% in May to 5.9% in June. Despite the job market’s steady gains, unemployment remains well above the 3.5% rate that prevailed before the pandemic struck, and the economy remains 6.8 million jobs short of its pre-pandemic level.

With competition for workers intensifying, especially at restaurants and tourist and entertainment venues, some employers are also offering signing and retention bonuses and more flexible hours. The proportion of job advertisements that promise a bonus has more than doubled in the past year, the employment website Indeed has found.

Those inducements are gradually drawing more workers off the sidelines and making a modest dent in the labor shortage. The proportion of Americans in their prime working years — ages 25 to 54 — who are either working or looking for work rose at a solid pace, though it remains below pre-pandemic levels.

Karen Fichuk, chief executive of Randstad North America, a recruiting and staffing firm, said that companies that offer higher wages are generally finding the workers they need. Offering $15 an hour, she said, has been particularly effective in persuading people to take jobs.

“Clients who are increasing their pay rates are filling their jobs,” Fichuk said, referring to companies that Randstad recruits for. “It seems like $15 an hour is kind of this threshold. It kind of tips the scale.”

Travis Crabtree, chief executive of Houston-based Swyft Filings, which processes government forms for people who are establishing small businesses, said his 85-person company is enjoying fast growth as more Americans start businesses. He has 19 job openings.

For entry-level customer service workers, Swyft already pays $15 an hour and offers stable work schedules and an office environment. So it hasn’t had any trouble finding new employees, Crabtree said.

But he has had to offer more perks to fill higher-paying jobs — digital marketers, for example, and data analysts — as many high-tech firms move to Texas from California. Staffers will be able to work part of the time from home after the pandemic.

“We definitely felt the need to step up our game on those types of things,” Crabtree said. “It’s a different ballgame for us. Two years ago, we weren’t competing against the Facebooks, LinkedIns, and Teslas of the world.”

Hiring in June was particularly strong in restaurants, bars, and hotels, which collectively absorbed the brunt of the layoffs from the recession. Those businesses added 343,000 jobs. Governments added 188,000 positions, mostly in education. And hiring by retailers picked up, with 67,000 jobs added.

Yet there are still factors holding back many people from taking jobs. About 1.6 million people said they didn’t look for work in June for fear of contracting the virus, though that figure dropped from 2.5 million in the previous month. And 2.6 million people who were working before the pandemic have retired.

The extra jobless aid may be enabling some people to be more selective in looking for and taking jobs. Roughly half the states plan to stop paying the supplement by the end of July in what proponents say is an effort to nudge more of the unemployed to seek work.

Electa Moss, who lives near Atlanta, has suffered a drop in her weekly unemployment benefit from $416 to $116 now that Georgia has stopped paying the $300-a-week federal supplemental benefit. Still, Moss is reluctant to take the low-paying jobs she sees advertised, with hourly wages as low as $10 or less. She earned $13 an hour at a nonprofit until she had to leave that job in September when she lost her child care.

“After taxes, I may have enough to pay the rent, but that would definitely be it,” she said, regarding a job she saw that offered $9.75 an hour. “People are really having a problem” going back to low-paid work.

There are also signs that people are re-evaluating their work and personal lives and aren’t necessarily interested in returning to their old jobs, particularly those that offer low wages. The proportion of Americans who quit their jobs in April reached its highest level in more than 20 years.

“People now realize that they have so many more options,” said Lisa Hufford, the founder of Simplicity Consulting, a firm that places professionals on contract jobs. “The talent market is so hot right now. Everyone I know is evaluating their options right now.”

Nearly 6% of workers who are in an industry category that includes restaurants, hotels, casinos, and amusement parks quit their jobs in April — twice the proportion of workers in all sectors who did so.

Rising numbers of quits mean that even employers that have been hiring may be struggling to maintain sufficient staffing levels.

A survey of manufacturers in June found widespread complaints among factory executives about labor shortages. Many said they were experiencing heavy turnover because of what they called “wage dynamics”: Other companies are luring their workers away with higher pay.

The U.S. job market is storming into summer. Job creation and wages rose sharply in June. And more and more Americans are confident enough to quit their jobs and look for a better one.

In the strongest gain since August, employers added 850,000 jobs last month. And average wages rose a healthy 3.6% from a year earlier, a sign that businesses need workers so badly they’re willing to ramp up pay.

The June jobs report did contain one conspicuous blemish: The unemployment rate actually ticked up last month. But many economists wrote that off as a technical blip.

With vaccinations still increasing, the number of new COVID-19 cases has plummeted to an average below 12,000 a day — down dramatically from around 250,000 in early January. The brightening health picture has allowed businesses to increasingly reopen and has encouraged formerly cooped-up consumers to rush out to restaurants, shops, and entertainment venues and to book vacation flights.

As employers post job openings at a record pace, they’re complaining that they can’t find enough workers to fill jobs. Economists expect the supply of workers to gradually catch up with demand. Some Americans are delaying their job search owing to lingering health concerns, difficulty making child care arrangements, or generous, though temporary, federal unemployment benefits. Others have decided to retire early or train for new careers.

The economy remains 6.8 million short of the number of jobs it had in February 2020, just before COVID-19 flattened the economy.

“It’s only a question of time before hiring catches up with buoyant labor demand,” said Lydia Boussour, senior U.S. economist at Oxford Economics. “The economy is set for a jobs boom in the coming months as labor supply constraints gradually dissipate.”

Boussour said she foresees job growth exceeding 1 million a month over the summer.

“Let the employment fireworks begin,” she wrote in a research note.

Here are five takeaways from the June jobs report:



The 850,000 jobs that employers added last month were a pleasant surprise. Economists had predicted about 675,000. Yet the unemployment rate ticked up from 5.8% to 5.9%. And the number of people who reported being employed actually dropped by 18,000.

What gives?

The contradictory numbers reflect the way the Labor Department compiles the monthly jobs report — with two surveys. The two surveys sometimes tell different stories, as they did in June. But the differences tend to even out over time.

One survey asks businesses how many people they employed during the month; this determines the number of jobs gained or lost.

The other survey asks households whether the adults living there have a job. Those who don’t have one but are looking count as unemployed; those who aren’t looking for work do not. This survey determines the unemployment rate.

The household survey, unlike the survey of businesses, counts farm workers, the self-employed, and people who work at start-ups. It also does a better job of counting small-business jobs.

But the survey of businesses uses a larger sample size and is considered more precise: The Labor Department surveys 145,000 companies and government agencies, compared with just 60,000 households.

Economists also suspect that technical factors might have thrown off the household survey in June. Brian Coulton, chief economist at Fitch Ratings, for example, says the drop in employed Americans might be explained by “the challenges of seasonal adjustment after” huge job losses in the spring of 2020.



A hot labor market, and perhaps a rethinking of personal priorities after COVID-19, has led many Americans to leave their jobs and look for higher-paying or more satisfying work elsewhere. In June, 942,000 people were unemployed because they voluntarily left their old employer. That was up 21% from 778,000 in May, and it’s the highest such monthly figure since 2016.

“Workers clearly know that they are in the driver’s seat right now, and many appear willing to walk away from their current position before they have even a new job lined up,” says Stephen Stanley, chief economist at Amherst Pierpont Securities.

In an earlier report, the Labor Department had reported that 4 million workers quit their jobs in April. That was the highest such figure on records dating to 2000.



The wild swings in the job market — from an epic collapse in the spring of 2020 as the coronavirus triggered devastating layoffs, to a vigorous rebound over the past year — have created confusion in the way the Labor Department calculates its numbers and adjusts them for seasonal fluctuations.

For example, the department reported a sharp increase last month in jobs in local (up 155,000), state (up 75,000), and private (39,000) education as schools reopened. But those job gains might have been exaggerated, the department conceded, because the bumpy switch from remote to in-person learning has “distorted the normal seasonal buildup and layoff patterns.”

Likewise, Joshua Shapiro, chief U.S. economist at the consulting firm Maria Fiorini Ramirez Inc., cautions that a surprising and seemingly unhealthy drop in weekly hours worked at private companies likely reflects the difficulty of accounting for people who work from home.

“With most who are able to work remotely still doing so at least part of the time,” Shapiro writes, “the reliability of these data is likely compromised to some degree.”



The unemployment rate rose 0.1 percentage points last month for Black, Hispanic, and white workers alike. The jobless rates are now 5.2% for whites, 7.4% for Hispanics, and 9.2% for Black Americans.

Despite steady job growth, lingering damage from the coronavirus recession is still taking a toll on Americans of all races: Nearly 6.5 million whites were unemployed in June, up 2.6 million, or 67%, from February 2020, just before the virus struck. Over the same period, the number of unemployed is up 53% to 1.9 million for African Americans and 65% to 2.2 million for Hispanics.



As the virus recedes and businesses reopen, Americans are increasingly packing up their laptops, leaving makeshift offices in the kitchen and trudging back to their old places of work.

The Labor Department reported that the proportion of people who are teleworking dropped to 14.4% in June — down from 16.6% in May and a peak of 35.4% in May 2020. (The figures include anyone who worked remotely at any point in the previous four weeks.)

Companies that operate out of downtown office buildings and restaurants that cater to weekday commuters are nervously waiting to see whether — or to what extent — the work-from-home trend sticks once economic life returns to normal after COVID-19. Many companies have already told their employees to expect a hybrid system in which they could work from home on certain days of the week.

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