Although new hires fell slightly in June, the US job market is still showing signs of strength: Unemployment is falling and wages continue to rise, according to the US Department of Labor’s latest jobs report.
The economy added 209,000 jobs as the unemployment rate fell to 3.6% from 3.7% in May.
“With over 200,000 jobs, it’s easy to pull more workers off the sidelines and keep up with population growth. it’s strong It’s not hot, but it’s not cold either. I think we’re in a good position right now,” said Elise Gould, senior economist at the Economic Policy Institute.
The employment-to-population ratio, which the World Bank uses as an indicator of how efficiently the economy provides jobs for people who want to work, was 80.9% for people aged 25 to 54, the highest level in more than 20 years. The female employment-to-population ratio was 75.3%, surpassing the pre-pandemic peak of 74.6%.
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“It’s hit another record high,” Gould said of the female employment-to-population ratio. “It’s been high for a couple of months and now it’s hit a new high, the highest on record… It dates back to 1948. I think this is a really important milestone that has been reached.”
She added: “Improvements have also been seen in men. They reduce their deficit [before the] Pandemic, but they just haven’t made it yet.”
Federal, state and local government employment rose by 60,000 in June and 56,000 in May, notable for a sector slow to recover from the pandemic. This year saw an average of 63,000 job creations per month, compared to 23,000 per month in 2022. While this job growth is a positive sign, the government would need to add 161,000 more jobs to reach February 2020 levels.
“What’s really important about the public sector, especially, is that it’s a uniquely good engine for upward mobility, especially for workers who face discrimination or struggle to get a job in the private sector,” said Chris Becker, senior economist and deputy Director of Policy and Research at Groundwork Collaborative. “… the public service sector provides really important services. We value these jobs because they are also of great benefit to society.”
Gould said: “The gap that worried me the most [in the public sector] It’s about state and local jobs and that’s where most of the gains were made, not just in June but also in May and April.”
Wage growth for low-income earners means more impact on US economy
The average hourly wage increased 12 cents to $33.58, and over the past year that wage has increased by 4.4%. Economists say these gains were particularly important for low-income earners, who have had a greater impact in this economy.
Becker said wages have improved due to policy decisions since the pandemic, such as the American Rescue Plan and expanding the child tax credit.
“We’ve really put a lot of money in people’s pockets and that has resulted in a really strong job market that has led to a lot of job opportunities. And that especially benefits people at the bottom of the income distribution,” he said. “In recent years we’ve seen really strong wage growth, especially for lower-end workers.”
Gould said workers found leverage by changing jobs and embarking on a new career path. The pandemic government support has made them less desperate to take the first job that comes their way, she said.
“These are certainly all promising signs. My caveat is that wages for these workers have been growing very slowly for decades, which will certainly limit these types of losses or increase inequality, but wage levels are still quite low,” she said.
Private sector employment rose by 497,000 jobs in June, well above average economists’ expectations from a Bloomberg survey, according to a report by the ADP Research Institute and the Stanford Digital Economy Lab. ADP, a payroll service provider, often has different data than the Bureau of Labor Statistics because its employment information comes from payroll transactions, while BLS data comes from surveys. June data showed that the five highest annual US wage changes were in Wyoming at 9.5%, Montana at 9.3%, Oregon at 8.4%, Idaho at 8.1% and New Mexico at 8% were recorded.
Still, economists say the black unemployment rate is worrying at 6% in June, down from 5.6% in May and 4.7% in April. April’s unemployment figures marked the first time since the Labor Department began collecting data that the unemployment rate for black workers fell below 5%. The unemployment rate for 16-19 year olds rose 11% from 10.3% in May and 9.2% in April.
“We know that black workers face widespread discrimination in the labor market,” he said. “We know that they are generally the last to be hired and the first to be fired, and therefore they will be the ones who will disproportionately bear the brunt of any policy decisions we make to put the brakes on this job market.”
Becker said he believes the Federal Reserve’s rate hikes, which it decided to suspend just a few weeks ago, will undo some of the progress made in narrowing the gap between the white worker unemployment rate, which stood at 3.1 in June % was, and and the unemployment rate for black workers. The Fed has indicated that it may hike rates again this year in a bid to lower inflation.
“I can’t predict what the Fed will do, but the job market isn’t hot,” Gould said. “It’s strong, but inflation hasn’t come from the labor market, so the Fed should keep pausing. The labor market has so far proved resilient to rate hikes, but they have a long lag, so it’s too early to say.”
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