Provided that the COVID-19 Delta variant doesn’t require interventions that change the trajectory of economic recovery, we anticipate monthly new U.S. jobs to average about 650,000 through the rest of 2021. Several factors contribute to our optimistic outlook, including the prospect of the U.S. economy reopening at full steam. (We discuss our outlook in forthcoming research on the reopening, inflation, and the Federal Reserve.) Vaccination rates by September should near their peak, which could persuade some people who were uncomfortable with face-to-face interactions or being in offices to return to work.
Schools are set to reopen with in-person classes, making more stay-at-home parents available to take jobs.
Then there’s the looming expiration of enhanced unemployment benefits and CARES Act unemployment coverage for workers not traditionally covered by unemployment insurance. In all, that will result in about nine million unemployed workers losing benefits by the end of September, which could drive more people back into the workforce.
An increase in workers will be good news for employers as job openings reached a record high 9.2 million in May 2021.1 An outsized share are in the leisure and hospitality industry, which was hit hard by COVID-driven government restrictions and consumer reluctance. Demand in this sector may not return to pre-pandemic levels even after the economy fully reopens, but as the sector has struggled to find workers, employment is still down by 2.2 million from its level in February 2020 before lockdowns started.1 Competition among employers has become fierce, resulting in solid wage gains in the industry. Average hourly earnings were up in June 2021 about 7% year over year, and that could entice people who have left the industry to come back.1
A tightening labor market might also encourage some recent retirees to change their minds. Although the aging of the American workforce has for some time been driving up the number of people reaching retirement, COVID led a wave of baby boomers—whether because of layoffs or concerns about catching the virus—to retire sooner than they might have planned. By our estimates, 1.6 million more workers retired in 2020 than we had forecast pre-COVID. If jobs are plentiful and pandemic fears abate, not all those retirements are likely to be permanent.