Americans are going back to work at a faster clip — and getting paid more to do so.
Driving the news: The U.S. economy added a better-than-expected 850,000 jobs in June. Average hourly earnings jumped 3.6% from a year ago, in a continuation of the trend seen over the past two months.
Why it matters: These numbers back up anecdotal evidence from employers across the country. Demand for workers is strong, forcing employers to raise the amount they’re offering to be able to compete.
The leisure and hospitality sector added a stunning 343,000 jobs — more than a third of June’s total job gains.
- That’s a big deal, because industry employers have been the most vocal about their inability to find workers.
America’s wages have hit a new record high of $30.40 per hour, up from $29.35 a year ago and $28.51 pre-pandemic.
What they’re saying: “It turns out that you can find workers, you just have to pay a better wage than in the past, because wages of low-wage workers are going up,” economist Betsey Stevenson tweeted.
But, but, but: The pickup in pay isn’t helping pull workers off the sidelines yet.
- The proportion of the population that’s in the labor force — 61.6% — didn’t budge. That number is well below its 63.3% pre-pandemic level.
The big picture: The still-elevated unemployment rate, along with the still-low total number of workers in the economy, indicates that the Fed has a long way yet to go before it reaches its full employment mandate.
- The millions of potential workers still on the sidelines will also reassure economists that a tight labor market isn’t likely to cause runaway inflation.
The bottom line: The job market is still 6.7 million jobs short of where it was before the pandemic hit.