The Real Unemployment Rate – July 2021
Bottom Line: Last month’s jobs report was far better than met the eye which is saying something because it looked good on the surface. For the second straight month the biggest storyline wasn’t the headline reported job growth or the base unemployment rate, but the real-unemployment rate. That’s because an additional 700,000 people who aren’t counted in the base unemployment rate (because they’re long-term unemployed, under-employed or marginally attached) gained employment during the month significantly dropping the real unemployment rate (U6). Over the past two months 1.3 million Americans in one of those three categories have gained full-time employment. There’s ample evidence illustrating available jobs for those who are willing to work. Over 20 states, including Florida, dropped the extended federal unemployment benefits in June. It seems to have helped get people who were on the sidelines back into the employment pool. That’s encouraging news going forward as well. As for some of the finer points from the report.
- Unemployment rate 5.9% (up .1%)
- +850,000 jobs
- Positive revisions from previous months totaling 15,000 jobs
The reported base rate and the real unemployment rate are two separate things... The real unemployment rate once underemployed, long-term unemployed and marginally attached people are accounted for looks like this:
- Actual: 9.8% (down .4%)
As mentioned, this was the best storyline in the report. The real unemployment rate dropped significantly and is now below 10% for the first time since the onset of the pandemic. There are currently 10.4 million people who are long-term unemployed, underemployed or marginally attached to the workforce which make up the difference between the base rate and the real rate.
As for Demographics...
- No changes based on differences in demographics during June
As for Money...
- The average hourly wage rose by 10 cents per hour during the month to $30.40
- The average full-time income is currently $54,854 a decrease of $188 over the prior month
This was a mixed bag. The good news is wages continue to rise as people are going back to work. It’s a strong indication that businesses are having to pay up to attract people to come work for them and that they’re willing to do so. The flip side is that average hours worked dropped slightly during the month so average full-time incomes dipped a touch. All-in-all, June proved to be an outstanding month for employment and there’s reason to remain optimistic going forward as well.