U.S. hiring accelerated last month as workers see pay gains

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This May 5, 2021 photo shows hiring signs posted outside a gas station in Cranberry Township, Butler County, Pa. The number of Americans applying for unemployment benefits dropped last week, reported Thursday, June 24, a sign that layoffs declined and the job market is improving. (AP Photo/Keith Srakocic)

WASHINGTON (AP) — In an encouraging burst of hiring, America’s employers added 850,000 jobs in June, well above the average of the previous three months and a sign that companies may be having an easier time finding enough workers to fill open jobs.

Friday’s report from the Labor Department was the latest evidence that the reopening of the economy is propelling a powerful rebound from the pandemic recession. Restaurant traffic across the country is nearly back to pre-pandemic levels, and more people are shopping, traveling and attending sports and entertainment events. The number of people flying each day has regained about 80% of its pre-COVID-19 levels. And Americans’ confidence in the economic outlook has nearly fully recovered.

The report also suggested that American workers are enjoying an upper hand in the job market as companies, desperate to staff up in a surging economy, dangle higher wages. In June, average hourly pay rose a solid 3.6% compared with a year ago — faster than the pre-pandemic annual pace. In addition, a rising proportion of newly hired workers are gaining full-time work, as the number of part-time workers who would prefer full-time jobs tumbled — a healthy sign.

“That underscores the growing bargaining power of labor,” said Joe Brusuelas, chief economist at RSM, a tax advisory firm. “There’s increasing confidence that they’re going to get better jobs at better wages as the U.S. economy expands.”

Speaking at the White House, President Joe Biden touted the job gains and suggested that his economic policies, including a $1.9 trillion economic relief plan that was enacted in March, were intended to make it easier for workers to find higher-paying jobs.

“The strength of our recovery is helping us flip the script,” Biden said. “Instead of workers competing with each other for jobs that are scarce, employers are competing with each other to attract workers.”

Friday’s report showed that the unemployment rate rose from 5.8% in May to 5.9% in June. Despite the job market’s steady gains, unemployment remains well above the 3.5% rate that prevailed before the pandemic struck, and the economy remains 6.8 million jobs short of its pre-pandemic level.

With competition for workers intensifying, especially at restaurants and tourist and entertainment venues, some employers are also offering signing and retention bonuses and more flexible hours. The proportion of job advertisements that promise a bonus has more than doubled in the past year, the employment website Indeed has found.

That is bringing more workers off the sidelines and back into jobs. The proportion of Americans in their prime working years — aged 25 through 54 — who are working or looking for work rose at a solid pace, though it is still below pre-pandemic levels.

Karen Fichuk, chief executive of Randstad North America, a recruiting and staffing firm, said that companies that offer higher wages are finding the workers they need. She said that offering $15 an hour is particularly effective at getting people to take jobs.

“Clients who are increasing their pay rates are filling their jobs,” she said, referring to companies that Randstad recruits for. “It seems like $15 an hour is kind of this threshold. It kind of tips the scale.”

Travis Crabtree, chief executive of Houston-based Swyft Filings, which processes government forms for people who are establishing small businesses, said his 85-person company is enjoying fast growth as more Americans start their own businesses. He has 19 job openings.

For entry-level customer service workers, Swyft already pays $15 an hour and offers stable work schedules and an office environment. So it hasn’t had any trouble finding new employees, Crabtree said.

But he has had to offer more perks to fill higher-paying jobs — digital marketers, for example, and data analysts — as many high-tech firms move to Texas from California. Staff will be able to work part of the time from home after the pandemic.

“We definitely felt the need to step up our game on those types of things,” Crabtree said. “It’s a different ballgame for us. Two years ago, we weren’t competing against the Facebooks, LinkedIns and Teslas of the world.”

Hiring in June was particularly strong in restaurants, bars and hotels, which collectively absorbed the brunt of the layoffs from the recession. Those businesses added 343,000 jobs. Governments added 188,000 positions, mostly in education. And hiring by retailers picked up, with 67,000 jobs added.

Yet there are still factors holding back many people from taking jobs. About 1.6 million people said they didn’t look for work in June for fear of contracting the virus, though that figure dropped from 2.5 million in the previous month. And 2.6 million people who were working before the pandemic have retired.

A temporary $300-a-week federal unemployment benefit, on top of regular state jobless aid, may be enabling some people to be more selective in looking for and taking jobs. Roughly half the states plan to stop paying the supplement by the end of July in what proponents say is an effort to nudge more of the unemployed to seek work.

There are also signs that people are re-evaluating their work and personal lives and aren’t necessarily interested in returning to their old jobs, particularly those that offer low wages. The proportion of Americans who quit their jobs in April reached its highest level in more than 20 years.

“People now realize that they have so many more options,” said Lisa Hufford, the founder of Simplicity Consulting. “The talent market is so hot right now. Everyone I know is evaluating their options right now.”

Nearly 6% of workers who are in an industry category that includes restaurants, hotels, casinos, and amusement parks quit their jobs in April — twice the proportion of workers in all sectors who did so.

Rising numbers of quits means that even employers that have been hiring may be struggling to maintain sufficient staffing levels.

A survey of manufacturers in June found widespread complaints among factory executives about labor shortages. Many said they were experiencing heavy turnover because of what they called “wage dynamics”: Other companies are luring their workers away with higher pay.

The struggle to fill jobs coincides with a swiftly growing economy. In the first three months of the year, the government estimated that the economy expanded at a strong 6.4% annual rate. And for all of 2021, the Congressional Budget Office estimated Thursday that growth will amount to 6.7%. That would be the fastest calendar-year expansion since 1984.

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Associated Press Writer Josh Boak contributed to this report.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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