Things to watch for in the June jobs report today

By Christopher Rugaber | The Associated Press

WASHINGTON — With the viral outbreak worsening and unemployment at Depression-era levels, the government today will issue what will almost surely be another remarkable jobs report.

Hiring in June might have reached the highest monthly total on record — 3 million. Yet so deep were the layoffs this spring that a gain that large would still leave tens of millions of Americans out of work and the unemployment rate in double digits. And even a jobless rate above 10 percent wouldn’t fully capture the scope of the pandemic’s damage to the job market and the economy.

A nascent recovery, evident in some recently improved data, may be stalling, according to real time data tracked by Homebase, a provider of time-tracking software for small businesses. Nationally, the number of hours worked at Homebase’s clients has leveled off after having risen sharply in May and early June. And business re-openings have flattened. The economic bounce produced by the initial lifting of shutdown orders may have run its course.

In states that are suffering the sharpest spikes in reported virus cases — Texas, Florida, Arizona and others in the Sun Belt — progress has reversed, with businesses closing again and workers losing jobs, in some cases for a second time.

Yet because today’s jobs report will be based on data gathered in the second week of June, it will still likely reflect an improving trend. The plateau of the past week will likely appear in the July jobs report.

Economists have forecast that employers added 3 million jobs in June and that the unemployment rate dropped to 12.3 percent from 13.3 percent in May, according to data provider FactSet. If they’re correct, the job gain would top the surprise increase of 2.5 million in May, which was a record. But it would also mean that Americans have still recovered just one-quarter of the jobs they lost in March and April, when states engineered widespread shutdowns of restaurants, bars, stores, hotels, movie theaters and other retail establishments.

In short, the jobs report is more important than ever but in some ways harder to read.

The three most recent jobs reports have been bedeviled by a unique problem created by the coronavirus: Millions of Americans are being counted as employed when they should be classified as temporarily out of work and therefore unemployed.

The government counts the number of unemployed through a monthly survey. Since March, its survey-takers have been classifying many Americans as employed even if their employers are closed because of the pandemic.

In many cases, these people believe they still have jobs. But the Labor Department says that if they aren’t working, they should be considered temporarily unemployed.

In May, 4.9 million people were counted as working when they should have been counted as unemployed. Had these people been properly classified, the unemployment rate would have been reported as 16.4 percent, not 13.3 percent.

Even accounting for the misclassification, unemployment is still declining, if only slowly. In April, if the same adjustment had been made, the jobless rate would have been 19.5 percent instead of 14.7 percent

How many layoffs are permanent?

Another unique aspect of the coronavirus recession is that many more laid-off workers than usual consider their job losses to be only temporary and expect to return to their old employers. That’s not surprising. Many restaurants, shops and gyms had expected to be closed for only a brief period to combat the pandemic before reopening for good.

And indeed, as states began reopening, many people were called back to their old jobs. In May, even among people who were still out of work, roughly three-quarters regarded their job losses as temporary.

But with many consumers still reluctant to dine out, travel, shop or congregate in groups, more business closures are becoming permanent. In May, the number of people who said their jobs were gone for good rose nearly 300,000 from April. If that figure keeps growing as the pandemic surges back, the job market and the economy would take longer to recover.

Unequal job gains?

Did the unemployment gap between whites and African Americans widen?

Since the recession began in February, it has struck Black and Hispanic Americans harder than the overall U.S. population. According to a Census Bureau survey, 53 percent of Black households and nearly three-fifths of Latino households have lost income since the viral outbreak struck.

But the job losses aren’t reversing at the same pace for everyone. While the unemployment rate for white Americans fell by 2 percentage points in May to 12.4 percent, it rose slightly for Black workers, to 16.8 percent. Unemployment for Latinos also fell but was still higher than for all other groups, at 17.6 percent.

Will state and local governments shed more jobs?

In May, even as most large U.S. industries added jobs, state and local governments cut 550,000 workers, after having slashed 950,000 in April. The job losses have raised concerns that even as the economy slowly recovers, faltering sales tax and income tax revenues will force state and local governments to keep cutting jobs.

That would damage the recovery. In fact, most economists say that widespread state and local government layoffs weakened the recovery from the 2008-09 Great Recession. Congress is debating whether to provide further aid to avoid such cuts.

Will more Americans stop looking for work?

Millions of Americans still have jobs but have been reduced to working part time rather than full time, leaving them with less money to spend and thereby slowing economic growth. In May, more than 10 million part-time workers would have preferred full-time work — more than double the number in February, before the virus struck.

And many of those who’ve lost jobs haven’t looked for new ones. That’s either because they are discouraged by high unemployment or they fear being infected by the virus. People who don’t search for new jobs aren’t counted as unemployed.

But including involuntary part-time workers and those who aren’t looking for a job, the so-called underemployment rate was 21.2 percent in May, far above the official unemployment figure but down from a record 22.8 percent in April.

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