July 8, 2021

The Labor Market Recovery Strengthened in June

New data from the Bureau of Labor Statistics (BLS) show that the economy added 850,000 jobs in June, which is the largest monthly increase since August 2020. However, those impressive jobs gains came alongside a slight increase in the unemployment rate — from 5.8 percent in May to 5.9 percent in June — because more people also entered the labor force.

The unemployment rate for June remains high relative to its pre-pandemic level


The industry sector with the largest number of gains was leisure and hospitality, and BLS notes that the gains in that sector were primarily driven by new jobs in food services and drinking places as pandemic-related restrictions eased in various parts of the country. Jobs in the government — primarily in state and local education — also increased substantially in June. (BLS notes that some of that increase could reflect school hiring patterns that have been disrupted by the pandemic.)

The job gains in June were mainly in the leisure and hospitality industry


In addition to the large number of job gains, the decline in the number of weekly unemployment claims offers further reason for optimism. The number of workers filing for unemployment compensation has declined steadily from its peak of 6 million last April to 364,000 in the week that ended on June 26.

Claims for regular unemployment insurance are now much lower than their peak in April 2020


Ongoing Concerns

Despite the large increase in job gains and the continued drop in the number of weekly claims for unemployment insurance, the rate of unemployment remains higher than before the pandemic for all races. Black, Hispanic, and Asian workers all exhibit rates of unemployment at least 3 percentage points above the levels recorded in February 2020. In June, the unemployment rate for white workers was 2.2 percentage points higher than it was before the onset of the pandemic.

Unemployment rates are higher now than they were before the pandemic, especially for non-white workers


What’s more, standard unemployment rates do not capture all of the negative effects that the coronavirus pandemic is having on the labor market. For example, the overall unemployment rate would be 6.9 percent if it included people who have stopped looking for work during the past four weeks — the headline unemployment rate does not count those people as unemployed because they are considered outside of the labor force. Including the 4.6 million people that are working part time despite desiring full-time work would bring the rate to 9.8 percent. In other words, about one in 10 American workers are currently affected by the ongoing downturn in the labor market.

The official unemployment rate does not include many workers that have been affected by the COVID-19 outbreak


A strong recovery in the labor market could have meaningful implications for the federal budget and the economy overall. For example, income and payroll tax receipts will be higher if more people are working. However, certain groups of workers are still struggling to find jobs, indicating that much remains to be done.

Related: Here’s Everything Congress Has Done to Respond to the Coronavirus So Far

Image credit: Photo by John Sommers II/Getty Images

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