The good news was also spread across nearly all sectors of the economy. Construction and manufacturing employment are nearly back to the pre-pandemic levels. Retail trade employment jumped by nearly 750,000 as stores started to reopen nationwide. Employment in health care leaped by nearly 400,000 as doctor and dentist offices came back. Even the hard-hit restaurant industry sprung back to life, adding nearly 1.5 million jobs. Employment levels remain down from the record highs in February, but the rate of change is dramatic and in the right direction.
We should also expect more good news next month. Twenty states have announced significant reopening moves since the middle of June when the employment survey was taken. This includes large states such as New York, Georgia, Illinois, New Jersey, Massachusetts and Virginia. These moves mean that more restaurant workers and other employees idled by shutdowns will be eligible to return to work, and this should more than outweigh the employment effect from pauses in reopening announced in states such as Texas and California.
Good news is also likely to come later in the year as schools reopen. Nearly 850,000 fewer people are currently employed by state and local government in education than were employed a year ago, based on seasonally adjusted figures. As schools and universities reopen for in-person instruction, even at reduced levels, most of these people will return to work. That will be a significant boost to the August jobs report, which will be released right before Labor Day.
This doesn’t mean that we will be back to full employment even if the positive trends continue. Employment is still way down in sectors associated with travel, such as air transport, transit and accommodations. Capacity limitations on restaurants and bars will surely keep employment in those sectors below February levels for the foreseeable future. As long as facilities for mass gatherings and indoor recreation remain closed, employment in movies, sports, museums and the like will remain depressed. We can’t get back to pre-pandemic employment until we get back to pre-pandemic life, and that’s still a long way off.
It does, however, suggest that the unemployment rate is likely to drop below 10 percent by Labor Day unless states start to shut down some of the recently reopened businesses. States reeling from the loss of revenue that comes from the economic morass will be loath to do that absent a significant rise in covid-19 deaths or significant shortages of hospital beds dedicated to treating the seriously ill. So far, that has not happened even in states that have experienced significant increases in the number of cases. Those statistics, not the rise in cases, are what people should be looking at to assess whether the economy will continue to reopen this summer.
The U.S. economy is not yet healthy, but it is no longer in critical condition. The jobs report suggests that it will continue to gain strength if permitted. Federal and state policymakers should keep that in mind as they navigate the difficult times ahead.