JUANA SUMMERS, HOST:
Much of the country is baking this summer, but the job market just turned cold. U.S. employers added only 57,000 jobs in June. That's less than half as many as the month before. The unemployment rate did inch down last month, but that is only because hundreds of thousands of people dropped out of the workforce. NPR's Scott Horsley joins us now. Hey there.
SCOTT HORSLEY, BYLINE: Hi, Juana.
SUMMERS: So, Scott, if I remember correctly, this spring, it looked like the job market was picking up speed. So what's behind the summer slowdown?
HORSLEY: Yeah. These numbers can bounce around a lot, so you don't want to jump to too many conclusions after just one bad report. But if you were looking for fireworks from the Labor Department today, what you got instead was a dud. Restaurants and retailers cut jobs last month. There was only a trickle of new jobs in manufacturing. Even healthcare, which had been a reliable source of employment gains, saw below-average hiring last month. And what's more, the jobs numbers for April and May were revised down, wiping out a total of 74,000 jobs we thought were added during the two previous months. Chief economist Daniel Zhao of the job search website Glassdoor says what looked to be a labor market that was picking up steam now seems more like it's treading water.
DANIEL ZHAO: We aren't necessarily seeing a sharp deterioration that would raise alarm bells, but we're also stuck a little bit. We're not really seeing that reacceleration that I think would get workers really excited about the current job market.
HORSLEY: And in fact, more than 700,000 people gave up looking for work last month. People who are not looking for work don't count as unemployed, and that's why the jobless rate inched down to 4.2%.
SUMMERS: And, Scott, why are so many people doing that? I mean, leaving the workforce?
HORSLEY: Well, it looks like a lot of would-be workers are getting discouraged. You know, more than 27% of the people who are out of work have been unemployed for more than six months, and with so little turnover, it's hard for folks to get a foot in the door. Now, some of the drop is also what you'd expect to see in an aging population. You know, thousands of baby boomers are retiring every day. But we're also seeing dropouts among people in their prime working years. So that's not a good sign. Now, there was one positive note in today's jobs report. The unemployment rate for young people aged 20 to 24 actually came down a little bit. Zhao says that is encouraging for new college graduates.
ZHAO: The class of 2026 is entering a slightly better job market than their peers from last year. Now, granted, it's never easy for new grads to enter the job market and really find that first job, but this is a case where there's a little bit of a silver lining to today's report.
HORSLEY: Unemployment among those young people is still elevated, though - 7.1% compared to an overall rate of 4.2%.
SUMMERS: And what about wages for people who do have jobs? Are paychecks keeping pace with today's rising prices?
HORSLEY: In general, no, they're not. Average wages in June were up 3.5% from a year ago. That's a little better than the month before. But since the war with Iran started, prices have been climbing even faster than that. So Zhao says the average worker's pay is no match for the rising cost of living.
ZHAO: We have seen that wage growth has been on the softer side in the last few months. And unfortunately, almost all of that will likely get eaten up by inflation.
HORSLEY: The new chairman of the Federal Reserve, Kevin Warsh, has promised that he and his colleagues will bring prices under control, even if they have to raise interest rates to do so. But after the lackluster jobs report today, investors think it's less likely the Fed will raise interest rates at its next meeting later this month. This is one of those times when bad news for job seekers turns out to be good news for the stock market. The Dow Jones Industrial Average jumped nearly 600 points today.
SUMMERS: NPR's Scott Horsley, thanks so much.
HORSLEY: You're welcome.
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