The Real Unemployment Rate – June 2021

The Real Unemployment Rate – June 2021

Bottom Line: Last month’s jobs report was far better than met the eye. As I explained at the time, while the base unemployment rate rose based upon sluggish job gains, the story beyond the headlines painted a far different story. That’s because an additional 600,000 people who aren’t counted in the base unemployment rate gained employment during the month dropping the real unemployment rate (U6). That said, we’ve still been operating in an environment where job growth is below where it could be given record job openings and millions of people collecting unemployment. This is why Florida and 24 other states are ending the federal supplemental benefits this month. There’s ample evidence illustrating available jobs for those who are willing to work. 

This month’s unemployment report once again showed disappointing headline job growth. Here’s the breakout:

• Unemployment rate 5.8% (down .3%)
• +559,000 jobs
• Positive revisions from previous months totaling 27,000 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: 10.2% (down .2%)

There are currently 11.1 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. Last month an additional 200,000 people in one of those categories gained full-time employment. Factoring that into the mix nearly 800,000 net jobs were added during the month. 

As for Demographics...

• Unemployment rates for Hispanics and Whites dropped (static for others)

As for Money...

• The average hourly wage rose by 15 cents per hour during the month to $30.33
• The average full-time income is currently $55,042 an increase of $133 over the prior month

This was also good news. Hourly wages are the second highest on record and annual earnings are now pacing a record high. On balance the news under the hood of the jobs report was again better than the headline numbers. This is encouraging heading into summer’s job market which includes the most first-timers in the workforce. 

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