I recently wrote a list of reasons to be optimistic about America's economy as it is nearing the end of its coronavirus crisis. We were treated to a solid jobs report on Friday morning that suggested the labor market may be gaining momentum again after its spring slump. Employers in the United States beat all expectations, adding 850,000 workers to their payrolls. This is an increase of 267,000 over May and the highest number since August 2020.AdvertisementAdvertisementAdvertisementIt is possible that June's bounce was a statistical illusion. The public schools added 155,000 new employees, accounting for a large portion of the month's gains. This number could be due to seasonal fluctuations in employment. According to the New York Times, there is a significant drop in teachers during summer school closings. This traditional decline in teacher numbers may have been caused by school closings that were pandemic-related.AdvertisementIf you look at the private sector's hiring activity, there are plenty of reasons to be optimistic. Nonprofits and businesses added 662,000 jobs in June, which is the same as what was added in February and March prior to April's slowdown.AdvertisementWhat other information does the report reveal than that there is some recovery in the job market? Unfortunately, not a lot. The most important argument about the economy these past months has been whether the pandemic unemployment insurance programs have made it more difficult for businesses to hire. 25 states have either pulled out of federal programs earlier than expected or are planning to do so in an effort to get their residents back to work. Indiana's plans were rejected by a judge. We are yet to see any tangible results from these moves in this report. It is difficult to tell, especially since we don't have state-by-state statistics.AdvertisementLeisure and hospitality have been at center of the unemployment benefits debate. The sector saw a record 343,000 new employees in the month and was responsible for more than half all private sector gains. This was the third consecutive month that restaurants, bars and hotels, casinos and theme parks added more than 300,000. In general, this sector has been growing at a faster rate than mid-wage industries such as manufacturing. You wouldn't expect jobless benefits not to have an impact on hiring. Some people believe that UI is not the problem making it difficult for restaurant owners. I've already made similar points. You could argue that the industry should be hiring more quickly, as its initial job losses were greater than those in other sectors during the pandemic.AdvertisementAdvertisementConsider the pace at which Americans leave unemployment to find work. They've been moving at a slower rate in recent months than you would expect, based on the amount of job openings. This suggests that something, whether it be UI, child care, or pandemic fear, is holding them back. They fell further behind the curve in June, Harvard economist Jason Furman noted this morning.AdvertisementIn recent months, only 24% of unemployed workers have taken up jobs each month. This has slowed down job growth. It should be closer to 29-34 percent. This is in some ways good news. It shows that there is still plenty of room before we reach a "speed limit". https://t.co/dhbNelUAVr pic.twitter.com/s1uAKZThbc Jason Furman, @jasonfurman July 2, 2021AdvertisementThis can be viewed in two ways. One, employers are still having difficulty hiring for whatever reason. Another reason is the fact that dozens upon dozens of states are threatening to terminate UI benefits to their citizens. This doesn't seem to have had much impact on the national picture.All this is to say that things are moving in the right direction. I wouldn't be able to make a big deal about how the economy is getting back on track and ready for business. The numbers don't support any particular theory regarding the current state of the labor market. They are a positive sign of progress.
