Steady job growth and other trends from Q2
Growing employment levels and rising earnings suggested a return to pre-pandemic economic health.
Job growth in the U.S. was steady in the second quarter across all industry sectors—but the emergence of the COVID-19 Delta variant may threaten those gains, a new report has found.
The quarterly economic briefing for 2021 from the National Council on Compensation Insurance (NCCI) generally had good news: growing employment levels and rising earnings suggested a return to pre-pandemic economic health. However, the report also noted the growth of the Delta variant, especially in certain regions, could delay or reverse such gains.
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A steady, not spectacular, recovery
The report noted the gains were in line with those seen in the year’s first quarter. All sectors experienced job growth, and most were approaching pre-pandemic levels of employment during the second quarter.
“Almost all economic sectors are gradually approaching pre-pandemic employment levels, with national employment gaps around –2% to –4%,” the report said. “The employment gap in Leisure and Hospitality, remains elevated at –13% but is also closing more quickly than in other sectors.”
Nonsupervisory employees are also seeing gains in earnings, with the biggest increase in Leisure and Hospitality. That sector saw a more than 10% increase in earnings since January.
The report noted that the national unemployment rate doesn’t necessarily reflect the gains in employment. “To date, the national unemployment rate is little changed in 2021, gradually falling from 6.3% in January to 5.8% in May before ticking up to 5.9% in June. This is not surprising,” the report said. “During an economic recovery, the unemployment rate can be expected to remain stubbornly stationary even as employment recovers. This is because workers who drop out of the labor force in the early stages of a recession, and hence are not counted as unemployed, start coming back into the labor force to search for jobs as the recovery gains pace. During the period of job recovery following a recession, re-entrants to the labor force effectively buffer the unemployment rate—adding new unemployed headcount to the labor force at the same time as other unemployed workers are finding jobs.”
Another problem, labor shortages, varies from industry to industry, the NCCI report found. The authors said that labor shortages may reflect a demand for greater compensation. Overall, they concluded, the labor shortage issue is a nuanced one and depends on the industry.
The threat of the delta variant
The report also noted the significant uncertainty introduced by a new variant of COVID-19 that is more contagious and seems to be quickly increasing the number of cases, mostly among the unvaccinated, but also with breakthrough infections of vaccinated Americans. The rapid spread of the Delta variant, the report said, “threatens to upset the narrative of virus independence.”
However, it is unclear what the overall impact of the new variant will be. “Dense regional outbreaks, if they occur, may hold back economic recovery in the affected localities or states. But they are less likely to derail recovery at the national level,” the report said. “And last winter’s coronavirus surge demonstrated that even a widespread and massive outbreak, with more than 6 million new cases nationally in December and January, had only a minor impact on the pace of job recovery.”
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