The U. S. economy added 1.8 million jobs in July, the U.S. Labor Department reported Friday. But the month’s gains are less than half of what they were in June, and have yet to significantly make up for the 22 million jobs lost since March.
The unemployment rate showed a similar pattern, declining to 10.2% in July from 11.1% in June, but still remaining worse than at any moment since World War II.
“We’re not even halfway back to where we were,” said Mike Shields, a project manager for the Economy League of Greater Philadelphia.
The report comes after states like Texas, California, and Florida reversed re-openings of businesses amid COVID-19 surges, peaking at over 77,000 new cases in one day in mid-July. Pennsylvania and New Jersey also scaled back some reopening measures, with both governors reducing indoor gatherings to 25 people.
Shields notes how momentum plays a big role in understanding economics. A jobs report like this “isn’t a tarot card,” he said. “You’re always reading a little bit behind.” So he sees these new numbers as a sign that the economy is starting to slow down after amping up its recovery over the last few months.
“We’re jamming on the brakes right now,” he said. “We’re slowing down, but we don’t know what we’re going to hit yet.”
Another indicator Shields worries about are permanent job losses, which remain at 2.9 million. “If the idea is to build the economy back, then our No. 1 issue is jobs,” he said.
The number of temporary layoffs in July improved to 9.2 million from 10.6 million. But Shields thinks that many of these temporary positions are coming from restaurants and other hospitality businesses that will face a difficult autumn as outdoor options become more limited. He says that new contract or temporary jobs might bode well for the short-term, but they don’t represent sustainable growth for the economy: “When a recession hits, those are the first jobs on the chopping block.”
John Longstreet, president and CEO of the Pennsylvania Restaurant and Lodging Association, shared those concerns. The report named hospitality, government, and retail as the industries that saw the largest job gains last month. Hospitality alone added a little under 600,000 jobs in July, with over 500,000 coming from employment in food and drink service. But Longstreet doesn’t think that trend will last.
Citing the capacity reductions that took effect in mid-July, he thinks “there’s no question that’s going to cost a lot of jobs because most restaurants can barely survive at 50% capacity.” The hospitality industry in Pennsylvania has over 240,000 jobs, according to the American Hotel and Lodging Association. When cold weather forecloses outdoor dining, Longstreet worries that “the gain we’re picking up in employment will probably be lost.”
He isn’t surprised that hospitality is the top industry of this jobs report. As one of the nation’s largest employers, its numbers “are going to be the leading numbers, even if they only see a small recovery,” Longstreet said.
Business has been tough at Don Barriga, a Mexican restaurant in West Philadelphia. Owner Pedro Campos opened the place a little over a year ago, with 20 tables inside and 15 seats outside. With the city’s restrictions, he could only use three outdoor tables when he reopened for dining at the end of June.
Though he says the community has supported him through take-out and delivery orders, he had to lay off two people after initial shutdowns in March. Since then, he’s adjusted hours for his remaining staff. “We had to cut the hours, so that everyone could still work,” he said.
While the report reflects growth in some areas, it also reflects racial disparities. Unemployment rates declined for whites, Asians, and Hispanics this month, but the rate for Black workers remained largely unchanged, decreasing by just 0.8% in July to 14.6%. Whites are the group with an unemployment rate in the single digits.
Shields, of the Economy League, says this is a sign that there are still many barriers to sustainable employment for Black workers: “When a white person is temporarily unemployed, an African American has no hope of getting a job.”
The July employment report also comes after the $600-a-week unemployment benefit from the CARES Act expired, with no renewal plan in sight. Both Shields and Longstreet believe that the numbers demonstrate that congressional leaders must quickly find a solution. “Many Americans are now out of work with no way to pay bills,” said Shields. “It’s pretty dismal.”
Matthew Bidwell, a professor of management at the University of Pennsylvania’s Wharton School, agreed. Not only are the benefits required for unemployed workers to support themselves, but they also pump money back into the economy. Losing those benefits will lead to more declines in state and local revenue, “which in previous recessions has translated to a lot of job cuts,” he said.
Bidwell thinks the slow pace of the recovery is disheartening as well. “The longer this goes on, the more businesses will close,” he said. “And that also makes it harder for people to return to employment.”
While the report indicates that jobs are still being added in some industries, Bidwell notes that there are still ongoing waves of permanent layoffs, and that these will likely continue until the coronavirus is controlled. That trend became more obvious in the latest numbers, as the percentage of workers unemployed for 15 weeks or longer jumped to 5% in July, more than double what is was in June. Bidwell points out that part of the reason for this increase is because 15 weeks ago was mid-April, when mass layoffs were rampant across the country.
Bidwell said that he actually expected employment numbers to be even worse. He attributes the job growth to varying levels of severity in the pandemic: “Some parts of the country are returning to normality, while at the same time others are being hit very hard by the virus.”