Strong June employment numbers are not due to the stimulus
Earlier today, the Bureau of Labor Statistics (BLS) published employment numbers for June. And according to the data,
Total nonfarm payroll employment rose by 850,000 in June, and the unemployment rate was little changed at 5.9 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in leisure and hospitality, public and private education, professional and business services, retail trade, and other services.
This has led to celebratory comments.
As the AP reported,
Speaking at the White House, President Joe Biden touted the job gains and suggested that his economic policies, including a $1.9 trillion economic relief plan that was enacted in March, were intended to make it easier for workers to find higher-paying jobs.
“The strength of our recovery is helping us flip the script,” Biden said. “Instead of workers competing with each other for jobs that are scarce, employers are competing with each other to attract workers.”
Nowhere else to go but up
Certainly, good economic policies have been known to jumpstart economies. But in this case, attributing June employment numbers to economic policy is misguided.
For one, the U.S. economy, much like the rest of the world, is coming out of a pandemic. There was little else where to go but up. As vaccinations have given way to reopening, individuals are more confident about going out and spending money. In other words, reopening efforts are jumpstarting the economy.
Indeed, there is a reason that job gains have been concentrated in the leisure and hospitality industry, which was significantly impacted by COVID-19 restrictions. As the Wall Street Journal reports
Perhaps no sector is heating up more than leisure and hospitality, which includes restaurants, bars, sports venues, museums and amusement parks. Nearly 1 in 4 jobs created last month were at restaurants and bars. Hourly wages for restaurant and other hospitality workers were up 7.9% in June from their pre-pandemic level.
“The floodgates have opened for events and food service and they didn’t open with regards to getting staff back,” said David Lombardo, general manager of Lombardo’s, a venue that hosts events in an ornate hall in Randolph, Mass., south of Boston.
Given the nature of the COVID-19 pandemic, recovery was nothing but inevitable.