Total nonfarm payroll employment rose by 1.8 million in July, and the unemployment rate fell to 10.2 percent, the U.S. Bureau of Labor Statistics reported today. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it. In July, notable job gains occurred in leisure and hospitality, government, retail trade, professional and business services, other services, and health care.
This is the opening paragraph of the Bureau of Labor Statistics’ news release today on the jobs numbers for July.
This is not nearly as good as the June numbers, which were very good. Nevertheless, any month in which the number of people employed rises by more than half a percent is a very good month. (Household data show that 142.2 million people were employed in June and that that had risen by 1.35 million in July, an increase of 0.9%.)
Also heartening for hospitality workers, who have taken the brunt of the job losses, is that their employment increased considerably. Here’s the relevant paragraph of the press release:
Employment in leisure and hospitality increased by 592,000, accounting for about one-third of the gain in total nonfarm employment in July. Employment in food services and drinking places rose by 502,000, following gains of 2.9 million in May and June combined. Despite the gains over the last 3 months, employment in food services and drinking places is down by 2.6 million since February. Over the month, employment also rose in amusements, gambling, and recreation (+100,000).
I have pointed out how much better the numbers would be if a bipartisan majority in Congress had not, in March, legislated a $600 per week unemployment benefit on top of normal state benefits. That benefit expired last Friday. If Congress does not renew that benefit, I expect an even bigger increase in August, which would be reported on September 4. I also expect, however, that Congress will renew a modified version of this benefit.
READER COMMENTS
Alan Goldhammer
Aug 7 2020 at 7:40pm
How can this be good news if both hourly earnings and work hours in the hospitality sector are collapsing. People may be hired back to work but at much reduced hours. Even fast food workers are seeing hours cut back because of lack of demand. you need to delve deeper into the numbers to get an accurate picture of what employment is really like. The same thing is happening in the retail sector. Yes, stores are open but hours per employee are down.
I regularly look at the FRED database across a number of sectors and the picture is far from rosy. Lots of offices in this part of the country are still closed and I’ve heard from some that they won’t be back to work in office for another three months. This will lead to continued downsizing in commercial real estate and associated support services (janitorial staff, local restaurants, etc.).
Thomas Sewell
Aug 7 2020 at 8:12pm
It’s good news compared to stores and restaurants being completely shutdown and those same workers sitting at home producing nothing for anyone.
Certainly things aren’t anywhere near back to “normal”, but at least they’re improving.
Jon Murphy
Aug 7 2020 at 10:13pm
Be careful here. “Collapsing” is an ambiguous term. Wages are down over the past few months, yes, but are still higher than they were a year ago. That trend makes sense.
Furthermore, we can expect to see a decline in wages even as new jobs are added if wages lag hiring. In a recovery, wages tend to lag hiring. In other words, we expect to see hiring increasing even as wages decline when a recovery is forming, just like we expect to see the small green shoots of flowers before the blossoms. If hiring continues, wages will have to rise.
True. But it is getting better.
Michael Byrnes
Aug 8 2020 at 7:34am
This is certainly better news than if no jobs had been added and good news for those who got back to work.
That said, there’s a lot not to like here, most notably that the pace of imprvement has slowed markedly.
Fred_in_PA
Aug 8 2020 at 1:16pm
You note that, “Congress . . . legislated a $600 per week unemployment benefit on top of normal state benefits. That benefit expired last Friday.”
That amounts to a 40 hour week at $15/hr. on top of the typical state benefit of about $330/week. Many of the unemployed saw their weekly income roughly double or better under this program. Understandably it’s very popular with them.
But it’s very hurtful to employers, who discover that these employees aren’t willing to take a cut in “pay” in order to go back to work.
Advocating its continuance is probably a win-win-win-win for House Democrats: They get to play Uncle Sugar to 10,000,000 voters; It cripples the economy, which hurts Donald Trump and the Republicans; It decimates smaller businesses, the despised bourgeoisie, for whom they never had much sympathy anyway; And it sets the stage for massive tax increases — the $6T we’re spending spread over rough 60,000,000 actual tax payers (not filers) works out to a tax increase of “only” $100,000 each.
Perhaps the best compromise we can get now is a mandatory $15/hr. minimum wage ushered in through the backdoor of $600/week minimum unemployment compensation payments.
Very disheartening.
Matthias Goergens
Aug 9 2020 at 3:22am
What makes you think that many politicians want to hurt small business owners and increase taxes as a terminal goal?
That’s the opposite of what they say, I would imagine?
Fred_in_PA
Aug 9 2020 at 2:19pm
Mathias;
You are correct to call me on my bluntness.
There are over a half million politicians in the U.S., almost all of them (94%) local. And I suspect you would be right in guessing that most of them don’t share the views I ascribed.
And you are correct in saying that this is pretty much the opposite of what most of even Congressional Democrats will say. Then, too, I think it would be naive to take as gospel truth everything a politician says: To succeed — even to survive — in their job they have to be good at telling us what we want to hear (rather than what they know or desire to be true).
Even among Congressional Democrats (and Republicans), there will be a fair number who don’t really have any well-formed philosophical perspective: Time-servers who like the prestige, and the perq’s, and will “go along to get along.”
But. The two Parties do stand for something (or at least the image of standing for something). And you get Party support — likely necessary to getting elected — by your public adherence to that image and those values.
I think it fair to say that the Democratic Party is the party of activist government. (My own view, following Hayek, is that this activity is necessarily in darkest ignorance. And that since they necessarily act without knowing what they’re doing, their actions will be at best merely wasteful — we spent the money but got no results.)
Activist government must be funded. (Unless the promises were empty — “We never seriously intended to do anything; Foolish of you to think we did.”) So yes, the Party is an advocate of greater taxation. Since that’s not popular, they will try to hide it — e.g., taxes on corporations (who pass it along), debt financing (i.e., taxes on future generations), inflation (a tax on the prudent), or taxes on “somebody else — not you, dear voter.” (“Tax the Rich!” seems to be the Party’s standby, but Trump’s tariffs would also fit this model.)
My postulated antipathy among Congressional Democrats for small businesses is probably less reliably present. But since Roosevelt, the Party has been openly hostile to business. And for a 100 years, the “intellectuals” in the Party have sneered at those who were “depressingly middle class.” Marxists open;y state their hostility to the petit bourgeois == a group consisting mostly of small business people. (Interesting that Adolf Hitler’s National Socialist German Workers’ Party also despised the shopkeepers.)
Phil H
Aug 9 2020 at 11:38pm
This is very good news. I never really understood the *economic* worries that seemed to be attached to the Covid epidemic. While everyone is forced to stay home, the economy will suffer, of course. But when everyone comes out again, the economy was always going to bounce back. There would be a hit to the absolute level of economic activity, but there was no fundamental reason why the trend should change. And so it has proved…
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