job creation at private companies tumbled in July

WVVA is helping to answer your questions about small business and personal finance. Every Wednesday, John O’Neal, the Executive Director of the Development Authority of Mercer County, is helping answer questions.

WVVA: John, are there any reports released yet on the status of jobs and the economy for the month of July?

O’Neal: The first preliminary numbers for July have been released, and the results are not good. Job creation at private companies tumbled in July. Payroll processing firm ADP reported that employers added only 330,000 positions in July, which is a serious decline from the June number of 680,000. This is the smallest number of monthly job gains since the country started emerging from the government imposed lockdowns in February.

WVVA: Why are we experiencing this decline in job growth, are employers concerned about the new Delta Variant of COVID?

O’Neal: There are undoubtedly concerns about the sensationalism surrounding the Delta Variant of COVID. Many employers are not as concerned about COVID itself, since vaccines are readily available and effective. They are concerned about another round of mask mandates, restrictions on capacity, and government imposed lockdowns. Some employers are pausing hiring plans until they see what governments are going to do.

We are also in the midst of an aggressive inflation wave. Costs of operating a business are rising sharply. Concerns about the federal government pouring trillions of dollars of new government spending nto the economy, and driving inflation even higher are causing many businesses and consumers to pull back and hold on to cash reserves.

WVVA: What about on the employee and consumer side? Are employers still having trouble finding employees?

O’Neal: Yes, a consequence of federal government COVID relief programs has been a flow of thousands of dollars into many American’s bank accounts. There have been several rounds of stimulus checks, enhanced unemployment benefits, and child tax credits with guaranteed monthly income. These government benefits have helped pay the bills for many Americans for quite a while now. Some people are in no hurry to return to work as long as the government benefits continue to flow. It is hard for many employers to compete with generous COVID relief plans.

So there are a number of factors at play in the slow jobs recovery that we are experiencing now. We will monitor the additional jobs numbers as they become available later this week, and report back to the viewers next week.

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