Employers brought back millions more workers in June as businesses began to reopen across the country. But the recent surge in coronavirus cases is threatening to stall the economic recovery long before it has reached most of the people who lost their jobs.
US payrolls grew by 4.8 million in June, the Labor Department said Thursday. It was the second month of strong gains after April’s huge losses, when businesses laid off or furloughed tens of millions of workers as the pandemic put a large swath of economic activity on ice. The gains were broad-based, cutting across industries and demographic groups.
But the thaw is far from complete. There were still nearly 15 million fewer jobs in June than in February, before the pandemic forced businesses to close. The unemployment rate fell to 11.1 percent in June, down from a peak of 14.7 percent in April but still higher than in any previous period since World War II. The rate would have been about 1 percentage point higher, the Labor Department said, had it not been for persistent data-collection problems.
The monthly jobs data was collected in mid-June, before coronavirus cases began to spike in Arizona, Florida, and several other states. More timely data, also released by the Labor Department on Thursday, showed that 1.4 million Americans filed new claims for state unemployment benefits last week — the 15th straight week that the figure exceeded 1 million — and another 840,000 filed for benefits under the federal Pandemic Unemployment Assistance program.
“Today’s announcement proves that our economy is roaring back,” President Trump exulted to reporters at the White House after the June numbers were released. He later added, ‘‘The crisis is being handled.”
Two hours later, Joe Biden offered a darker assessment.
“There’s no victory to be celebrated,’’ the former vice president said in a video recorded at his home in Delaware. ‘‘We’re still down nearly 15 million jobs and the pandemic is getting worse not better.”
“Today’s report is positive news and I’m thankful for it — for real,’’ Biden continued. “But make no mistake, we’re still in a deep, deep job hole because Donald Trump has so badly bungled the response to coronavirus.”
The US unemployment rate is expected to stay above its pre-pandemic levels through the end of 2030, according to a 10-year economic report released Thursday by the Congressional Budget Office.
The agency is predicting that the unemployment rate in the fourth quarter of 2030 will be 4.4 percent, down from 7.6 percent at the end of 2021 and 6.9 percent at the end of 2022. The current level, according to data published Thursday by the Labor Department, is 11.1 percent. Before the spread of the coronavirus pandemic shut down vast swaths of the US economy, unemployment had reached 50-year lows, coming in at 3.5 percent in February.
Weekly claims increased in Texas, Arizona, and several other states, although they fell in other states that have had a resurgence of the virus. Economists fear that layoffs could accelerate now that states have begun ordering some businesses to close again.
In Massachusetts, about 29,000 residents filed initial unemployment claims last week, down from about 30,000 the previous week.
Economists warn there is another threat looming: the expiration of government assistance, in particular the enhanced unemployment benefits providing an extra $600 per week to laid-off workers. Without congressional action, those benefits will cease at the end of this month, potentially eliminating a key source of support not just for the workers but for the broader economy as well.
“We’re in a very deep hole, and we just set ourselves back again,” said Diane Swonk, chief economist at the accounting firm Grant Thornton. “It’s difficult to climb out of that hole.”
The H.Wood Group, which operates a dozen bars, restaurants, and nightclubs in the Los Angeles area, had just begun to dig out of that hole when the latest round of shutdown orders hit. The company spent weeks figuring out how to operate safely, installing plexiglass dividers between banquettes, eliminating reusable menus, and adopting policies like temperature checks at the door and mandatory masks.
In June, that work appeared ready to pay off: Two of the company’s restaurants reopened, and three bars were set to reopen this week. Customers, eager to eat out after weeks of lockdown, snapped up reservations.
“The first two nights were a little weird,” as people adjusted to masks, face shields, and temperature checks, said John Terzian, the company’s co-owner. “But after Night 3, I think people settled in, and honestly it felt perfect.”
Then Sunday, Gov. Gavin Newsom ordered Los Angeles bars to shut down; Wednesday, he ordered restaurants to suspend dine-in service as well. Terzian, who had brought back roughly half his 400-person workforce and was on track to bring back the rest, instead had to start telling people they were out of work again. He said he worried that many would leave the industry altogether.
Terzian said many smaller restaurant businesses might not be able to afford to reopen a second time. And while H.Wood is financially stable, he said, he will be slower to reopen next time, lest authorities pull the rug out from under him.
“I think we would be really hesitant,” he said. “Staying shut we understood, but reopening and reshutting is just wrong.”
Economists say stories like Terzian’s drive home a central fact of the crisis: The economy cannot truly begin to recover until the pandemic is under control. Reopening quickly may bring back some jobs, but that rebound will not last if increased activity brings more virus cases.
“The virus drives the economics,” said Betsey Stevenson, a member of the Council of Economic Advisers under President Barack Obama who is now at the University of Michigan. If cases continue to rise, as health officials warn, “we’re not going to have people going back to work,” she added.
“In fact, we’re going to see more people staying home,” she said.
The problem is that the longer the public health crisis drags on, the more permanent damage is done to the economy. Total employment has grown the past two months because companies have begun recalling temporarily laid-off workers. But layoffs have continued as the economic effects of the pandemic ripple through the economy, reaching businesses and industries that were spared earlier.
If businesses cannot reopen, or can return only at a fraction of their previous sales, many temporary job losses are likely to become permanent. The number of people reporting they had permanently lost their jobs rose in June even as the number of workers on temporary layoff fell sharply for the second consecutive month.
“We’re going on four months now,” said Olugbenga Ajilore, a senior economist at the Center for American Progress, a progressive group. “There’s only so long that these businesses can hold out before it just doesn’t become feasible.”
The rebound in jobs has not been shared equally across groups. The unemployment rate for white workers has fallen more than 4 percentage points over the past two months, to 10.1 percent. For Black workers, the jobless rate has fallen just over 1 point, to 15.4 percent, and the unemployment rate for Black men actually rose in June. Asian workers, too, have seen only small gains. Latinos, hit particularly hard when the pandemic shut down much of the service sector, have had a larger drop in unemployment but their jobless rate remains elevated at 14.5 percent.Material from the Associated Press and The Washington Post was used in this report.