In June, employment rose by 4.8 million and the unemployment rate fell to 11%. Where did those hires come from? I construct matched data from the CPS to investigate. 1/10

As in May, over half of hires were from temporary layoff. However, in June we saw a small increase in the share of hires from employment and searching unemployment. This is a good sign, indicating that market-based job finding rates are starting to return. 2/10

We can see this over time by looking at the job finding rates for searching unemployed. 17% were hired in June, which is back to the March 2020 level but still below trend. 3/10

Similarly, the job finding rate for employed ticked up, but remains well below pre-pandemic levels. This could be due to job finding rates or worker search behavior. 4/10

As most hires are from temp layoff, we can look at all flows from TL. 40% were hired in June, up from May. However, we also do see an inc. in moves to search and NILF suggesting either temp. layoffs have been made permanent, or workers are giving up on waiting for recall. 5/

We are still seeing separations in June, but a somewhat smaller share are going directly to temp. layoff compared with April and May. 6/10

We can also look at gross flows over a 4 month match. As of June, 15% of individuals who were employed in March remain non-employed. Compared to Feb-May, the temp layoff share of non-employment has fallen, as those workers are gradually recalled. 7/10

If we look at April job-losers who were re-hired by June, most individuals returned to the same industry, strongly suggesting these individuals were recalled to their previous employer. Even for individuals who were not on temporary layoff, 2/3 return to the same industry. 8/10

Conclusions? By June, the labor market has improved quite a bit, however we still have a massive stock of individuals who lost their job in April and have not returned to employment. 9/10

Market hiring remains weak, which makes it difficult for individuals whose temporary layoffs becomes permanent to find new jobs. With the pandemic flaring up again, workers will need extended UI and other public support for the foreseeable future. 10/10