U.S. job growth picks up in June; unemployment rate rises to 5.9%
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[July 02, 2021] By Lucia Mutikani
WASHINGTON (Reuters) - U.S. job growth
accelerated in June as companies, desperate to boost production and
services amid booming demand, raised wages and offered incentives to
draw millions of reluctant unemployed Americans back into the labor
force.
Nonfarm payrolls increased by 850,000 jobs last month after rising
583,000 in May, the Labor Department said in its closely watched
employment report on Friday. The unemployment rate rose to 5.9% from
5.8% in May.
The jobless rate has been understated by people misclassifying
themselves as being "employed but absent from work." There are a record
9.3 million job openings. Economists polled by Reuters had forecast
payrolls advancing by 700,000 jobs last month and the unemployment rate
dipping to 5.7%.
Average hourly earnings rose 0.3% last month after increasing 0.4% in
May. That raised the year-on-year increase in wages to 3.6% from 1.9% in
May. Annual wage growth was in part flattered by so-called base effects
following a big drop last June.
The report suggested the economy closed the second quarter with strong
growth momentum, following a reopening made possible by vaccinations
against COVID-19. More than 150 million people are fully immunized,
leading to pandemic-related restrictions on businesses and mask mandates
being lifted.
Politicians, businesses and some economists have blamed enhanced
unemployment benefits, including a $300 weekly check from the
government, for the labor crunch. Lack of affordable child care and
fears of contracting the coronavirus have also been blamed for keeping
workers, mostly women, at home.
There have also been pandemic-related retirements as well as career
changes. Economists generally expect the labor supply squeeze to ease in
the fall as schools reopen and the government-funded unemployment
benefits lapse but caution many unemployed will probably never return to
work.
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An In-N-Out Burger advertises for
workers at their restaurants location in Encinitas, California,
U.S., May 10, 2021. REUTERS/Mike Blake/File Photo
Record-high stock prices and surging home values have also encouraged early
retirements.
According to job search engine Indeed, 4.1% of jobs postings advertised hiring
incentives through the seven days ending June 18, more than double the 1.8%
share in the week ending July 1, 2020. The incentives, which included signing
bonuses, retention bonuses or one-time cash payments on being hired, ranged from
as low as $100 to as high as $30,000 in the month ended June 18.
Some restaurant jobs are paying as much as $27 per hour plus tips, according to
postings on Poachedjobs.com, a national job board for the restaurant/hospitality
industry. The federal minimum wage is $7.25 per hour, but is higher in some
states.
With employment not expected to return to its pre-pandemic level until sometime
in 2022, rising wages are unlikely to worry Federal Reserve officials even as
inflation is heating up because of supply constraints. Fed Chair Jerome Powell
has repeatedly stated he expects high inflation will be transitory.
The U.S. central bank last month opened talks on how to end its crisis-era
massive bond-buying.
(Reporting by Lucia Mutikani; Editing by Dan Burns and Chizu Nomiyama)
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