Nobody Should Celebrate the July Jobs Report

• Author: William Asher
• Posted: 2024-03-22

Many have taken to celebrating the monthly job report numbers as if an unemployment rate above 11% is something about which to get excited. Placed in context, the peak unemployment at the depth of the Great Recession was right around 10%. Nonetheless, our current unemployment figures are volatile and may only be partially accurate. In June, many experts acknowledged that the number of employed Americans was overstated by almost five million people who were actually unemployed. This led to an understatement of the unemployment rate by almost three percentage points. Now, there are similar whispers about the July jobs report that leads to the conclusion that this jobs report is overly rosy as well.

This May Be as Good as it Gets

One of the main issues with the most recent jobs report is that it appears to be almost as good as it gets for the economy. While many have returned to work, the jobs created number merely measures the people who went back to a job that they previously held before they were laid off or furloughed. The problem is that the number of permanent job losses has risen as it becomes apparent that certain industries are simply not coming back ever. Other industry contractions, such as in the travel sector, will take years to return to the level that they were before the pandemic.

Another part of the most recent jobs report that was troubling was the rise in the number of long-term unemployed. When the jobless are skewed towards the short-term unemployed, it shows that many have just recently lost their job and are set to go back to work imminently. Higher long-term unemployed numbers show that there is a structural problem with the economy that shows that people are not matched with the current job openings. Alternatively, it would show that job listings have gone away and will not return.

Moreover, digging into the jobs report shows that employers are still not confident about rehiring their employees or bringing new ones onto the roles permanently. Some of the job gains in the most recent data are in the area of temporary jobs. This shows that employers lack conviction in their hiring and want to maintain some flexibility to be able to terminate the worker if business conditions do not remain improved. Given the possible resurgence of COVID-19, this gives businesses some element of control and keeps them from having to take additional measures to lay off their workers.

Anecdotally, many of the workers who are getting jobs right now report that they are returning to their previous positions that had furloughed them or temporarily laid them off. Those who are looking for new positions maintain that there are very few job openings in the economy. Thus, new jobs that appear to be created are just reflections of companies opening back up for business.

The COVID-19 Resurgence Is Likely to Stall Job Growth

There is also a sense that this may be the last jobs report that gives some sign of hope for an economic recovery. The recent increase in COVID-19 cases will have a strong chilling impact on economic activity. Businesses had hired back their workers so they could staff up when the customers returned. However, many companies have now been forced to scale back their reopening plans and tens of thousands of news cases of COVID-19 daily have now clouded their economic future. Thus, many companies that have rehired workers may not be forced to make an about-face. Other businesses who had planned to recall workers in the near future will put those plans on hold. Finally, some seasonal businesses may simply not open at all this summer as closures or reduced capacity make it more difficult for them to operate profitably.

The bottom line is that there is nothing to celebrate about a jobs report that has unemployment over 11%. Unemployment is likely going to remain high for a number of years as the effects of the pandemic will be felt well into the next decade. There are a growing number of industries that will disappear permanently, while others will be drastically shrunk. It will take some time for these workers to be retrained and to be able to find jobs in other fields. At the same time, businesses will need to rebuild the confidence to expand and bring on more workers, and that does not happen during a recession.