On the June Jobs Report

A big beat in payrolls, but a big miss for the unemployment rate. It’s too soon for enhanced unemployment benefits to have rolled off in the half of US states that have opted out of the federal program. The “Household Survey” reported a small drop in total employment, even though it also reported that 1.7 million persons were no longer unable to work due to pandemic-related business closures. Hourly earnings continue to rise sharply as employers bid for scarce labor, though less sharply than in prior months. A new dynamic has arisen, in which a near-record number of employed workers quit to find other work, presumably in response to higher earnings offered to new employees. If all the growth in average earnings is all explained by new employees, the "new worker premium" is so great that relatively labor-intensive low-productivity sectors like Leisure and Hospitality, hardest hit by the lockdowns, can’t compete.