The fall in the unemployment rate by nearly a full percentage point in July to 10.2 percent might seem to be unalloyed good news, a sign job seekers may soon be able to find a position.
Dig a little deeper and the picture isn’t so bright.
The Labor Department’s U-6 measure, which includes discouraged workers who have given up the search for work as well as those who are in part-time jobs because they can’t find full-time positions, stands at 16.5 percent, seasonally adjusted.
The U-6 figure has come down from 22.8 percent in April. Still, the U-6 is among a series of data points that underscore just how difficult the labor market remains for those out of work.
Even as employers added 1.8 million jobs last month, the Labor Department reported Thursday that nearly 1.2 million workers filed initial claims for state unemployment benefits. It was the 20th week in a row that the figure topped one million.
“The rate of churn in the labor market remains incredibly high,” concluded Morgan Stanley’s economics team. In plain English, that means millions of workers finding a job only to be fired soon afterward, or being let go permanently after assuming a layoff was temporary.
“I think the U-6 is a better indicator of the job market than the 10 percent unemployment rate,” said Beth Ann Bovino, chief U.S. economist at S&P Global. “The traditional unemployment rate doesn’t capture what’s happening on the ground.”
The American economy gained 1.8 million jobs last month, even as the coronavirus surged in many parts of the country and newly reintroduced restrictions caused some businesses to close for a second time.
Still, the increase reported Friday by the Labor Department was well below the 4.8 million jump in jobs in June and a sign that momentum is slowing after a burst of economic activity in late spring. The unemployment rate fell to 10.2 percent.
By Allison McCann·Unemployment rates are seasonally adjusted. The government began collecting standardized unemployment statistics in 1948.·Source: Bureau of Labor Statistics
“The labor market continues to heal, which is encouraging, but there is a long road ahead,” said Michelle Meyer, head of U.S. economics at Bank of America.
She noted that 42 percent of the jobs lost since the pandemic hit had now been recovered, but warned the remainder would be harder to make up.
“In the very early stages of the recovery it’s easier to bring back workers quickly just to have a functioning operation,” she said. “It’s not a snap back to pre-Covid levels by any means. It’s a healing process.”
The Labor Department report follows the expiration of federal supplemental unemployment benefits of $600 a week late last month, payments that kept many households afloat while buoying the economy. Republicans and Democrats have been at odds over a new emergency package that could restore the supplement in full or in part.
After coronavirus-related lockdowns forced dining establishments in New York to close in March, Hannah Lane, 24, was laid off as a server in a popular Gramercy Park restaurant where she made about $60,000 a year.
Her girlfriend, also a restaurant worker, was laid off on the same day. Both applied for unemployment benefits, and although her girlfriend began receiving them right away, Ms. Lane’s payments did not arrive for more than two months. They struggled to scrape together the $1,400 rent for their room in a Bushwick, Brooklyn, apartment that they share with another roommate, and mostly subsisted on rice and beans to cut food costs.
Then, in early July, as New York allowed restaurants to open for indoor dining, Ms. Lane was recalled to her job.
“I went back into work, clocked in, went back on payroll, the whole nine yards,” she said.
She had spent just one day there when Gov. Andrew M. Cuomo reversed course and prohibited dining inside restaurants. Ms. Lane was laid off again, and found herself back on unemployment and looking for work. Her search continues. And now, without the $600-a-week federal supplement that expired last week, her unemployment pay will come to $401 after taxes.
“It’s really disheartening to watch Congress bungle this,” she said. “The taxes we’re paying on our unemployment checks pays their salaries. So we’re paying them while they decide which crumbs to give us. We’re totally powerless.”
Industries are rebounding, but none have fully recovered
Cumulative change in jobs since July 2016, by industry
By Allison McCann·Data is seasonally adjusted.·Source: Bureau of Labor Statistics
Despite renewed restrictions on business activity in some parts of the country, the leisure and hospitality industry managed to show some signs of life in July, gaining 592,000 jobs, or one-third of the total gain in payrolls for the month.
The sector was among the hardest hit when restaurants and bars closed abruptly in March as the pandemic hit. July’s increase follows a jump of 3.4 million in May and June, seasonally adjusted, but still leaves employment in the leisure and hospitality field 4.3 million below where it was in February.
Retail, another hard-hit sector which has seen numerous bankruptcies in recent months, added 258,000 jobs.
“Retail and leisure and hospitality are two of the sectors most sensitive to coronavirus, and I was pleasantly surprised by the pace of job creation there,” said Michelle Meyer, head of U.S. economics at Bank of America.
The plunge in employment in these sectors hit lower-paid workers especially hard, including millions who depend on tips. For big increases in hiring at restaurants and bars, employees may need to wait until indoor dining is again permitted in states like New York — something unlikely to occur until a vaccine is found.
Black men continue to have the highest rate of unemployment
Unemployment rates by race for men, women and overall
By Allison McCann·Rates are seasonally adjusted except those for Asian men and women.·Source: Bureau of Labor Statistics
Black workers have made limited progress toward lowering their very high unemployment rate even as the jobless situation improves for their white counterparts, showing the uneven distribution of the pandemic’s economic pain.
The July jobs report from the Labor Department, released Friday, shows that the seasonally adjusted unemployment rate for Black adults hovered at 14.6 percent in July, down slightly from 15.4 percent the prior month and a little more than two percentage points from its peak in May — but still more than double its 5.8 percent rate in February, before the pandemic took hold.
Unemployment for white workers eased to 9.2 percent in July. While that’s up sharply from 3.1 percent in February, it has fallen about five percentage points from its April peak.
The unemployment rate traces those who are out of work but are looking for new jobs, or who are on temporary layoff, and Black workers have a much higher unemployment rate than whites in the best of times. They are also often slower to regain work in recoveries and expansions.
Unemployment among other minority groups also remains elevated. The rate for Hispanic workers was at 12.9 percent, up from 4.4 percent before the crisis began, and Asian workers — who previously had the lowest jobless rate of any demographic — posted a 12 percent unemployment rate in July.
Economic officials have been concerned by the reality that job losses have been concentrated.
“The rise in joblessness has been especially severe for lower-wage workers, for women, and for African Americans and Hispanics,” Jerome H. Powell, the chairman of the Federal Reserve, said at a news conference in late July. “This reversal of economic fortune has upended many lives and created great uncertainty about the future.”
Employment in state and local government arrested its decline in July — but the change was largely the result of a quirk in how the numbers are adjusted, and it left the combined work forces much smaller than February.
Local governments have cut about 970,000 jobs since the month before the pandemic took hold, while state governments now employ 200,000 fewer people, on a seasonally adjusted basis. Combined, they have shed nearly 6 percent of their pre-pandemic work force.
Economists and policymakers are concerned that the job losses will continue as local government budgets come under extreme strain. While July offered what seemed to be a reprieve, with state and local hiring ticking up, the improvement was heavily driven by education hiring as seasonal adjustments made the numbers look rosier. On an unadjusted basis, the figures showed continued declines.
“Typically, public-sector education employment declines in July,” the Bureau of Labor Statistics said in its release, but “declines occurred earlier than usual this year due to the pandemic, resulting in unusually large July increases” after the seasonal adjustment.
Aid to state and local governments remains a flash point in negotiations over a new federal relief package. Democrats are pushing for more assistance, something that congressional Republicans and the White House have resisted or opposed.
The Federal Reserve and Treasury Department have established a program to buy short-term municipal debt from certain state and local governments, but it has not been used much. The terms are not generous, experts have said, and many local governments are hoping for grants rather than loans that they would have to pay back.
Without help, further job losses could be in store.
“Unlike small businesses or restaurants — which respond immediately to economic shocks — deep budget and job cuts in state and local government will likely grow in the next few months and fester for years to come,” researchers at the Brookings Institution wrote in a recent post.
For Jackie Anscher, the closing of the boutique fitness studio where she taught spinning classes in Long Beach, N.Y., until March meant more than the loss of a job. It was the end of something she was passionate about and halted the deep connections she had built with clients.
“I miss it like I’ve lost a limb,” she said. “What started as an exercise class encompassed so much more. I’m a therapist on a bike. I’m sure a lot of people can relate to the emotional loss.”
Ms. Anscher, who taught eight to 10 classes a week, said her financial situation was stable because of her husband’s job. But there’s nowhere to go to keep teaching as gyms remain closed. “This was a forced retirement,” said Ms. Anscher, 58. “I’m not ready to retire. I’m waiting to see how I can pick up the pieces.”
Stephanie Horowitz, the studio’s owner, didn’t think the moratorium on classes would be the end of her business, Ocean Ride, when it was imposed in March. She offered spinning classes over the internet, she said, “but it never took off the way we needed it to.”
By mid-July, the financial drain was too great, and she decided to shut down after seven years. Some of the bikes have been sold, and Ms. Horowitz has been cleaning out the space on the South Shore of Long Island, a few blocks from the Atlantic. Seven part-time workers, including Ms. Anscher, have lost their jobs.
“We were a staple in the community and we had a good run,” said Ms. Horowitz, 40. “It’s emotional. We had just bought new bikes last year. Who knows what the future holds for any of us?”
Stocks on Wall Street lost their footing on Friday, as investors moved cautiously amid escalating tensions between the United States and China and little indication that lawmakers in Washington were close to resolving their differences over the next economic aid package.
It helped, somewhat, that the monthly employment report showed that American employers added 1.8 million jobs in July, continuing a rebound that began earlier this year. But even in that report there were reasons for caution: The rate of hiring slowed dramatically from June, and the unemployment rate remained above 10 percent.
The S&P 500 fell less than half a percent, but it was the index’s first decline in a week. Gains until now have brought the S&P 500 close to its late February record, meaning that stocks have recouped nearly all of the losses they suffered as the coronavirus pandemic first began to spread in the United States.
Hanging over Wall Street was President Trump’s decision late Thursday to order sweeping restrictions on two popular Chinese social media networks, TikTok and WeChat. Two executive orders cited national security concerns in barring transactions with WeChat or TikTok by any person or property subject to the jurisdiction of the United States. The orders take effect in 45 days.
The moves are expected to prompt retaliation from China. A Chinese Ministry of Foreign Affairs spokesman called the executive orders a “nakedly hegemonic act.” Shares in Tencent, the parent company of WeChat, fell almost 6 percent, and markets in Asia dropped.
Investors were also watching talks in Washington over what shape another economic aid package would take. Federal unemployment benefits, a moratorium on evictions and aid for small businesses shuttered during the pandemic hang in the balance, and economists have repeatedly warned that failure to extend the assistance could imperil the American economy.
With little to suggest a compromise was in sight, Steven Mnuchin, the Treasury secretary, said the negotiators were expected to touch base by phone on Friday to determine whether it would be worthwhile to convene in person for more talks.
After the recent lapse of a federal supplement to unemployment payments, and with a patchwork of eviction moratoriums either at an end or set to expire soon, 30 million to 40 million tenants risk losing their homes in the coming months, according to a report released Friday by dozens of academic researchers and housing advocates.
Even if the actual number is a fraction of that figure, it would still be several times the current annual rate of eviction filings — about 3.7 million a year. And it could have a cascade of effects that erode affordable housing and weaken an already hobbled housing system long after the coronavirus crisis has subsided, by pushing small landlords into foreclosure and further weakening state and local budgets as property-tax collections fall behind.
Citing a range of public and private data sources, the report noted that a broad swath of renters had until recently been protected by the $600 a month in supplemental unemployment payments, but many are now falling behind. These bills are accruing just as several federal, state and local eviction moratoriums are expiring, and amid a continued surge in the virus in many hot spots, and a darkening outlook for the economy.
“The public costs of eviction are far-reaching,” the report said. “Individuals experiencing displacement due to eviction are more likely to need emergency shelter and rehousing, use inpatient and emergency medical services, require child welfare services, and experience the criminal legal system, among other harms.”
With 13 million fewer people working since the pandemic hit, according to the monthly jobs report released on Friday, the economist Kenneth S. Rogoff — an expert on financial crises — says the American economy is at a precarious point.
“We are going to clock the worst recession since the Great Depression, regardless of how fast we bounce back at this point,” he said. “The virus is coming back, hard and fast. It really does look like this is going to have profound long-term impacts.”
A Harvard University professor, Mr. Rogoff is a noted historian of economic calamities. His books include “This Time Is Different: Eight Centuries of Financial Folly,” written with Carmen M. Reinhart in 2009.
Mr. Rogoff said the current state of virus was reminiscent of 1918 Spanish Flu, in which the second wave of virus proved even more devastating from an economic and public health perspective than the first. At this point, the economic damage from the coronavirus has far surpassed the 2008 recession, he said.
Small businesses will be hit hardest, Mr. Rogoff said.
“We’re going to start to see a lot of small businesses fall by the wayside, a lot of people who are unemployed become chronically unemployed,” he said. “We’re in very, very dangerous territory.”
Large corporations will be more shielded from the impact of the virus, accelerating their ability to crush smaller competitors, a trend that the United States has been experiencing over the last 40 years, he said.
“They have cash reserves to survive this,” he said. “And so their monopoly power is going to grow.”
When the pandemic hit, David Espy was working as a safety manager overseeing the construction of a resort hotel at Walt Disney World. But in mid-March, when virus-related shutdowns forced entertainment venues to close, Mr. Espy lost his job.
After being unemployed for one month, Mr. Espy was hired by a consulting company called Safety, Solutions and Supply.
The job pays Mr. Espy, 59, significantly less than his old one. Before the pandemic, he was making $125,000 a year. Now, he works roughly 12 hours a day, five days a week, and makes about $75,000.
“I would call myself underemployed,” he said. “I’m working at a reduced rate just to pay my bills.”
The new job does not pay him enough to cover his expenses, including two car loans and the mortgage on his house in Valrico, Fla., where he lives with his wife and a 20-year-old son. To make ends meet, he is spending $2,000 of his savings each month.
Mr. Espy said that at that rate, he would deplete his savings within nine months, and that he was worried about how to pay for his son’s college housing and books in the coming year.
Here’s some of the news you might have missed.
The Evening Standard, a free daily newspaper in London, is planning to lay off 139 employees, or about a third of the staff, as well as other noncontract workers. The paper’s main readership — commuters in central London — has all but vanished because of the pandemic, but the company was already facing financial difficulty, having reported a pre-tax loss of £13.6 million ($17.8 million) last year. A spokesperson said the company would focus on growing the paper’s digital and live events business. .
Uber said on Thursday that its revenue in the second quarter dropped 29 percent to $2.2 billion from a year ago and that its net loss narrowed to $1.8 billion, as the ride-hailing giant deals with the fallout from the coronavirus pandemic. The revenue decline was the steepest since Uber went public in May 2019.
Rupert Murdoch’s News Corp reported a $401 million loss for the three months ending in June, with much of the decline related to impairment charges for some of its assets in Britain and Australia and restructuring costs related to the coronavirus pandemic. The company revealed for the first time financial details of its Dow Jones division, the group that publishes The Wall Street Journal. The unit was News Corp’s only growing business on an annual basis.
With operations ceased for the entirety of the quarter and most of its employees laid off or furloughed, AMC Entertainment, the largest theater chain in the United States, posted a quarterly loss for the period ended June of $561.2 million. Revenues totaled $18.9 million, a 98.7 percent plunge from the same period last year for the Kansas-based company. The coronavirus has laid waste to AMC’s 1,000 theaters scattered across the globe, calling into question whether it would be able to stay financially viable.
The Trump administration is considering forcing Chinese companies to delist their shares from stock exchanges in the United States unless they share their audits with American regulators, a move that would further ratchet up tension between the world’s two largest economies. The President’s Working Group on Financial Markets recommended the move in a report released on Thursday as a way to protect American investors from what it described as the risks posed by Chinese companies.