Will Delta dent the economic recovery?
The July jobs report showed a vast improvement
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"America is getting back to work," said Neil Irwin at The New York Times. The latest figures from the Labor Department showed that 943,000 jobs were added in July, a vast improvement over the average increase of 567,000 in the prior three months. The unemployment rate dropped by half a percentage point to 5.4 percent, a figure that "not too long ago would have prompted quite a few economists and central bankers to declare 'Mission: Accomplished.'" A particularly good indication of the rebuilding economy is that the number of long-term unemployed (those out of work for six months or more) decreased by 560,000, the biggest drop since the pandemic began. "Despite all the headaches businesses are reporting in trying to attract workers, employers and workers really are connecting with each other at a pace not seen in recoveries from the previous three recessions."
The numbers could be even better if there were not still too many "incentives not to work," said The Wall Street Journal in an editorial. Twenty-four states are still offering $300 federal unemployment bonuses. No wonder nearly half of small-business owners say they "had job openings last month they couldn't fill." A record 10.1 million jobs were open as of the final day of June. Pay raises and signing bonuses may not be enough to close that gap, said Delphine Strauss at the Financial Times. "The past 18 months have led many people to reassess their working lives." It's not just bartenders saying no to "grueling, antisocial hours without job security." Banks can't attract junior analysts who'll accept "all-night PowerPoint marathons" for a six-figure starting salary. "Meanwhile, wage subsidies and higher benefits have helped people hold out for work they want."
"The bigger point is that job gains are accelerating," said Robert Burgess at Bloomberg. That should be enough for the Federal Reserve to say the economy has met its threshold for "substantial further progress" and for the central bank to decide it's "ready to ease its foot off the stimulus pedal." Failing to do so "will lead to our economy overheating and to unavoidable inflation taxes that hardworking Americans cannot afford."
The Fed must still weigh "an enormous, Delta-shaped asterisk," said Catherine Rampell at The Washington Post. These job numbers were based on data collected in mid July, before COVID cases began to spike dramatically across the country. "We don't yet know how much damage it will inflict" economically, but recent surveys suggest "Americans who had lately gotten more comfortable resuming their normal lives — traveling, dining out, seeing movies, returning to jobs — may retrench." Many businesses are already delaying return-to-office plans until October, said Chip Cutter at The Wall Street Journal — or even later. "A range of prominent companies," including Amazon, Lyft, and Dell, "now predict it will be 2022 before most workers return." We've seen that employees can mostly stay productive while working from home. But as this pandemic drags on, bosses are growing increasingly "concerned about their workers' mental health and how to keep them motivated."
This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.