Esri updated its unemployment map last week and found that in May smaller cities and towns added more jobs while employers in urban areas continued to lay off workers. Blue dots show increasing employment while orange shows decreasing employment.
Image: Esri

The good news is that the unemployment rate fell in June to 11.1%. The bad news is that unemployment claims went back up in the third week of the month and states started to pause reopening plans at the same time.

Employers added 4.8 million jobs in June, which was better than what economists were expecting. Employers in the leisure and hospitality sector added 2.1 million jobs while retailers opened up 740,000 jobs and education and health services added 568,000 positions.

The data for the June report reflects economic activity from the first two weeks of June. The US Labor Department also reported last week that the seasonally adjusted unemployment rate was 13.2% for the week ending June 20.

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Glassdoor analyzed employer job posting activity in June and found that 31% of employers posted new openings since the start of the month and 33% reduced job postings during the same timeframe. The research company said this suggests a stronger recovery for larger companies.

Glassdoor’s analysis also found that the tech industry saw fewer job openings in tech jobs, including a 4.8% drop for IT, 3.9% drop in computer software and hardware roles, and a 2.2% drop in internet and tech jobs. Uber, Air BnB, and Groupon had the most layoffs in the tech sector in the early months of the pandemic.

Glassdoor’s analysts said that hiring at big tech companies has stabilized but that jobs have not come back at small and midsize companies that are still dealing with uncertainty and lost business. Glassdoor Chief Economist Andrew Chamberlain said that June’s positive jobs report provides a powerful signal of how swiftly US job growth can bounce back and how rapidly businesses can reopen once the nation finally brings the coronavirus under control.

That has not happened yet as states start to limit public activity in response to rising case numbers. At the end of June, California Gov. Gavin Newsom issued new shutdown orders, closing bars and shifting restaurants back to carry-out only, and Texas Gov. Greg Abbott shut down bars and river rafting trips and reduced restaurant seating capacity to 50% from 75%.

The World Health Organization reports that Saturday was the world’s biggest single-day increase in COVID-19 cases. WHO said more than 60% of the confirmed cases reports were in the Americas, including the United States and Brazil.

Seth Harris, the former acting secretary of Labor in the Obama administration, said that it looks like unemployment claims have plateaued between 1.4 million and 1.9 million claims.

“Sizable segments of the economy are still retrenching with workers losing jobs as bankruptcies accelerate and businesses either remain closed or re-close in states suffering rising infection and hospitalization rates,” he said.

Harris said that the 11.1% unemployment rate is based on data from the first two weeks of June and does not reflect the expiration of the Paycheck Protection Program on June 30 or the pause in reopening in many states.

“The American economy is in a different place than it was three weeks ago,” he said. “Also, all the jobs growth was simply temporarily furloughed workers returning to work.”

Chamberlain agreed that June’s jobs report is a look in the rearview mirror.

“With surging COVID-19 cases hitting new highs in the past week, rough waters are surely ahead for the economy in the coming months as a second wave could again shutter millions of American small businesses and put a freeze on hiring,” Chamberlain said.

Another factor influencing the job market is workers’ fears about the safety of returning to work. Harris recently worked with Remesh, an online focus group company, to measure how workers are feeling about going back to the workplace.

In a conversation with 300 people conducted via instant messaging, Remesh found that workers are worried about the health risk of going back to offices and other in-person workplaces. Seventy-two percent of workers believe the government is reopening too quickly and prioritizing the economy over their safety and health.

Other findings include:

  • Only one-third of workers said it was safe to return to their physical work space
  • 76% of workers said that the office is only as safe as the sickest person there
  • 43% of white workers think it’s safe to go back to work
  • 21% of Latinx workers think it’s safe
  • 18% of Black workers think it’s safe

“Until we address this fear, workers will not be willing to work and get back to normal spending, and our economy will not fully recover,” Harris said.

Urban vs. rural unemployment

One bright spot was the increase in hiring in rural communities in May. Esri updated its unemployment map last week and found smaller cities and towns added more jobs while employers in urban areas continued to lay off workers. This trend was strongest in the Midwest, parts of the South, and the West. The map shows increasing employment in blue and decreasing employment in orange. The size of the circle represents the number of jobs.

At the same time, many urban counties and some states (including Texas, Florida, North Carolina, and South Carolina) are still losing jobs as the COVID-19 pandemic gets worse in those areas.

The Congressional Budget Office said it expected the economy to keep growing through the rest of the year, although it will still be 6% smaller than it was in January 2020.