PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Jobs Picks Up Speed in June: +4.8 Million

By at 2 July, 2020, 12:45 pm

by Raymond J. Keating-

The U.S. Bureau of Labor Statistics reported notable job gains in the month of June.

Both surveys the BLS reports on showed job growth in June. The establishment survey pointed to a gain of 4.8 million in nonfarm payroll jobs. From the low hit in April, nonfarm payrolls have regained 7.5 million jobs. That’s noteworthy, but it must be put in context. When comparing the June level to the pre-pandemic level in February, the U.S. has still lost 14.7 million jobs.

Meanwhile, the household survey noted a gain of 4.9 million in June. Over the past two months, the economy has regained 8.8 million – an even better showing than the payroll survey numbers.

As SBE Council has pointed out before, the household survey tends to better capture startup and small business activity. But comparing the June level to February’s pre-pandemic level, the U.S. economy is down by 16.6 million (see the following chart).

Source: Federal Reserve Bank of St. Louis, FRED

Other points worth highlighting from the household survey include the labor force increasing by 3.5 million during May and June, but still down in June by 4.6 million compared to February.

That decline in the labor force means that the unemployment situation is worse than the stated rate of 11.1 percent and 17.8 million unemployed stated in this same report from the BLS, since those not in the labor force are not counted in unemployment data. From February to June, those “not in the labor force” increased by 5.2 million.

It also must be noted that there has been a lower than normal response rate for both the establishment and household surveys, and problems persist (as noted by the BLS, though apparently less so in June) regarding incorrect classification of certain workers, which means that unemployment actually is higher than stated in the BLS release.

As for the labor force participation rate, it climbed back to 61.5 percent in June, compared to April’s 60.2 percent. However, prior to these past three months, the June 61.5 percent labor force participation rate is the lowest since 1976.

The employment-population ratio registered 54.6 percent in June. Again, prior to the past three months, that level has not been seen in a dataset going back to 1948.

The recovery of jobs in May and June from the bottom hit in April should be welcomed, even celebrated.

At the same time, though, a steep climb remains to get back to where we were in terms of jobs just four or five months ago. For good measure, the recent resurgence in coronavirus cases no doubt will lead to increased caution among consumers and many business owners, and has generated governmental delays or even roll backs in re-openings some in parts of the country. This latest shift in the pandemic makes clear that, unfortunately, questions and uncertainties will continue to plague the well-being of Americans in terms of health and the economy.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

 

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