U.S. Unemployment Rate Fell to 11.1% in June


Unemployment drops from 13.3% to 11.1% as 4.8 million jobs were added in June.

The U.S. unemployment rate dropped in June, falling from 13.3% to 11.1%, as employers added 4.8 million jobs amid ongoing reopening, according to The Wall Street Journal.

Hiring was supported by business re-opening and government aid. Small businesses receiving federal loans through the Paycheck Protection Program continued to recall workers. Jobs in June are still 15 million fewer than in February, and the jobless rate is much higher than a 50-year low of 3.5% in March.

A nationwide surge in coronavirus cases may threaten to upend the recovery as some states are halting or reversing reopening plans. Thursday’s jobs report from the Labor Department is based on survey data collected in mid-June, before governors paused or rolled back reopening plans. Of the 4.8 million jobs that were added in June, 40% came in the leisure and hospitality sector as many states have allowed restaurants and bars to reopen. Restaurants and bars, however, could be the first to reclose as new cases spike.

Teriyaki Madness, a Denver-based franchised restaurant chain, is adding 10 stores that will need 25 employees each because customers increasingly turned to online ordering and curbside pickup.

“Our economy is roaring back,” said President Trump. Trump said replacing him in the November elections would hurt the economy but played down the threats from the resurgent outbreak. “The crisis is being handled,” he said.

Employment in retail, health care and manufacturing also saw gains, driving down the temporary layoff number by 5 million. However, the number of unemployed Americans on permanent layoff increased by 600,000 over the same period. Marianne Wanamaker, a labor economist at the University of Tennessee, who previously served as an economist in the Trump administration, noted that “we’re in the beginning of a slow recovery. I think the recovery will stall out if we don’t get control of the virus.”

The number of Americans filing for unemployment benefits dropped by 55,000 to 1.43 million last week, according to the Labor Department. Unemployment claims have dropped to 1.5 million from 7 million in late March. Declines in the jobless category were uneven across racial groups. The jobless rate for white workers dropped 2.3 percentage points to 10.1% in June, while the rate for Black workers fell 1.4 percentage points to 15.4%. The rate for Latino workers fell 3.1 percentage points to 14.5%.

Due to the continually increasing cases, states including Texas, Arizona, and Florida have ordered businesses to reclose and imposed new restrictions undertaken to halt the virus spread.

Lisa Cook, an economics professor at Michigan State University, pointed out that “the big picture is this is still an emergency. There are small businesses and other businesses that are permanently closing.”

Texas Tubes, a New Braunfels tubing rental firm, had paused operations and laid off 30 employees as Gov. Greg Abbott ordered the water-recreation outfitters to close.

“Our season is only so long, so if this thing goes to September, then we’re done for the year,” said Coley Reno, the firm’s owner.

People are not ready to return to in-person activities as new cases spike. “It’s made me nervous,” said Stephanie Casebeer, a group fitness instructor at Miami-area gyms, who has been temporarily laid off during the pandemic. “I want to go back to work, and I want to go back to work safely.”

Republicans and Democrats have been arguing about whether to extend the extra $600 a week in the federal stimulus bill. Democrats have suggested remaining the extended aid, while Republicans have argued that the extended benefits were no longer needed.

The National Federation of Independent Business said “many owners received their loans in April and can no longer afford to keep workers past June.”

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Economics, Finance and Investing