The US Bureau of Labor Statistics announced Friday that the US unemployment rate dropped to 10.2% for July. Last month’s rate was an improvement over the 11.1% unemployment in June and 14.7% in April. Before the coronavirus pandemic, unemployment was hovering at 3.5%.
The BLS also reported that the US added 1.8 million jobs in July. This is the third straight month of job gains since the country lost 20.8 million jobs in April earlier this year. The 1.8 million jobs exceeded the expectations of economists. who forecasted only 1.5 million additions to non-farm payroll in July. It was also a marked contrast with the 4.8 million jobs added last June.
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A surprise development was the report of a slight increase in hourly wages. Against expert predictions of a half-point decline, wages went up by 0.02%. By comparison, June had more jobs, but wages declined by 1.3%.
Return of confidence
The slow recovery is a welcome change and might be a signal that some businesses are hopeful to reopen. According to Beck Frankiewicz, ManpowerGroup North America President, it’s about how people feel. If employers are confident to reopen and workers feel safe to get back to work, recovery will happen. She said: “It’s not just about the economic conditions in the state or the status of the virus, it’s about how people feel.”
According to ManpowerGroup, job postings are increasing in three categories. The first is jobs that transform businesses like software developers. The second is jobs that move things such as delivery service people. The third group is the jobs that help people such as doctors.
Pandemic still in force
After an optimistic June, various industries are now struggling to get jobs back on track. As more coronavirus cases sprouted, US businesses started closing again. Unemployment started creeping back in. After gaining 2 million jobs in June, the leisure and hospitality sector only added 592,000 jobs in July. Retail trade jobs increased by 258,000 in July after a rise of more than 800,000 during the prior month. Government jobs bucked the trend and added 301,000 in July, after an increase of 54,000 in June. Retail also gained 258,300 jobs, while manufacturing payrolls increased by 26,000. Education and health services added 215,000 workers as schools reopen in some states.
The cautious approach to reopening is a stark contrast to June’s extravagance. Realizing that the coronavirus is still out there, businesses have become wary. Businesses who availed of government bailout programs are seeing their cash running out. All the while, Republicans and Democrats are still detailing the next stimulus program. One major bone of contention between the two parties is the amount to give to unemployed workers. The GOP finds the amount of $600 excessive, as it entices people to keep not working. Democrats argue that given the lack of jobs, the $600 is more than ever needed.
Andrew Hunter, senior economist for Capital Economics remains optimistic. He said: “The 1.763 million increase in non-farm payrolls in July confirms that the resurgence in new virus cases caused the economic recovery to slow, but also underlines that it has not yet gone into reverse.” He added that employers should continue to rebound over the coming months. He cites lower trends of coronavirus infections and high-frequency activity indicators.
While some vaccines have shown promising results, they have yet to receive approval. State governments have accepted the need for citizens to wear masks to stop the Covid-19. Implementing the rule is a different matter, as some Americans refuse to wear masks. They consider mask-wearing as an affront to their freedom.
The road to recovery is a long and winding journey. July offered a slight hope with the increase in job gains, but the total unemployment rate is still bad. The next few months will show how Americans will address the spike in cases. Should coronavirus cases go lower and people begin going out again, America’s efforts might go to waste. Businesses reopen, more jobs become available. Then, more chances of infection. Maybe it’s time, we slowly reopen but hold off celebrating a win over coronavirus. It can wait, at least until a safe, proven vaccine gets approved.
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Business owners of the Capitalist, have you decided to reopen and get people to work again? Why or why not? Let us know by leaving your thoughts on the comment section below.