Did the unemployment rate drop after unemployment benefits ended?
The Department of Labor released the US jobs report for July, showing the fastest rate of hiring increase in more than a year despite fears the Delta variant could hamper reopening of businesses .
The figures show that US employers created 943,000 jobs, while the unemployment rate fell from 5.9% to 5.4%. Another a million unemployed Americans reported that they had found a new job in July, nearly quadrupling the number who had done so in the previous month.
Concerned about the moderate gains in the labor market in recent months, 26 states chose to withdrawing prematurely from additional unemployment programs funded by the federal government. However, some have seen their decisions overturned by state judges.
I have not yet found a fault in this employment report. I have never seen such a wonderful set of economic data:
– Job creation in most sectors
– Big drop in unemployment rate, even bigger for Blacks & Hispanics / Latinos
–Redn in long term unemp
– Solid wage gains (nominal)
– Jason Furman (@jasonfurman) August 6, 2021
The unemployment rate “is going in the right direction”
The July jobs report beat forecasters’ expectations, predicting that around 860,000 new jobs would be created. the the hospitality sector was again the biggest beneficiary with Americans more comfortable traveling and states easing restrictions on covid-19. Hotels and restaurants added 327,000 jobs last month.
Some companies had complained that they struggled to find enough workers as they began to reopen and the lack of available labor had a positive impact on wages. the the average hourly wage in July 2021 was 4% higher that it was a year earlier.
Experts have offered various explanations for the decline in unemployment, many of which relate to the fluctuations typical of certain industries that are observed each year.
In addition to the newly opened hospitality sector, employment in education has skyrocketed as schools prepare for the return of face-to-face learning. The Department of Labor’s Bureau of Labor Statistics said, “Pandemic-related staff fluctuations in education have distorted normal seasonal patterns of accumulation and layoff, likely contributing to job gains in July.”
Positive report could allay fears over unemployment benefits
Despite promising figures from the Ministry of Labor, it appears that the reduction in the unemployment rate was unrelated to the decision by some states to end supplementary benefits early. UKG payroll and time management company found that changes among hourly workers in states that canceled the benefit increased to only half the rate of those who remain in the federal program.
Hourly jobs grew twice as fast in states that * kept * $ 300 / week in unemployment benefits compared to those that cut them.
I’ll never understand why people just want other people to be poorhttps://t.co/13QdgFsPdU
– Dan Price (@DanPriceSeattle) August 5, 2021
It appears that the additional unemployment benefits actually boosted the employment rate, perhaps by further stimulating the economy of state-owned enterprises.
“Unemployment benefits weren’t the thing that kept people from going to workSaid Dave Gilbertson, UKG vice president. “There are other elements, especially in their personal life, which make it very difficult to return to work.”