July's big jobs gain probably has no connection to GOP governors cutting unemployment aid, Biden's Labor Secretary says

• July's jobs report brought promising figures, beating expectations with a gain of 943,000 payrolls.
• Marty Walsh says that's due to Biden initiatives on childcare and vaccines, not states cutting benefits.
• The Labor Secretary said it's too early to tell if the Delta variant will slow growth or require a UI extension.

July's jobs report beat expectations handily, showing 943,000 job gains, accelerating wage growth, and a bigger drop in unemployment than expected. It's another sign of a more robust recovery, marking seven months of the US adding jobs.

Labor Secretary Marty Walsh talked to Insider about the strong report and why it was so good. He doesn't think it's due to 26 states opting out of federal unemployment benefits early. The July report was the first to factor in most of those states' early terminations.

He chalked up June and July's gains to major spending from the Biden administration.

"I think what has contributed to the increase in participation is money from the American Rescue Plan that invested $39 billion in childcare," Walsh said. He also attributed gains to the "president's plan on vaccinations and the way he's handled coronavirus."

When asked about the decision by many Republican governors after April's disappointing jobs report to prematurely end federal unemployment benefits - in many states both the additional $300 a week as well as programs that expanded eligibility and duration - Walsh said he has not seen "any indication" of that. In all, 26 states have ended the federal benefit before September, all of them except Louisiana governed by Republicans.

Some preliminary data supports Walsh's argument that vaccination rates have helped drive employment back up. Insider's Grace Dean reported that hospitality workers have been returning in the Northeast, a trend that economists interviewed by The Wall Street Journal attributed to the region's higher vaccination rates.

Also, an analysis by economist Luke Pardue at payroll platform Gusto found that, in the states that ended unemployment benefits early, workers came back at far higher rates in states with higher vaccination rates. That analysis suggested that vaccination rates were a bigger factor than enhanced unemployment benefits in keeping workers out of the workforce.

Walsh warns the Delta variant could still jeopardize economic recovery

One warning sign for recovery, according to Walsh, is what happens with the Delta variant over the next 10 to 14 days. Already, the highly infectious variant jeopardized some of the economic policies that Biden enacted with a more clear endpoint for the pandemic in mind.

Walsh said it's too early to talk about whether the Delta variant will slow the pace of job gains, or prompt a longer extension of enhanced unemployment benefits.

"The president did take a move the other day by expanding the eviction moratorium," Walsh said, referring to a last-minute reversal by the Biden administration to enact a moratorium protecting renters in areas with high rates of variant infection, after the nationwide one lapsed on July 31. He added: "I'm hoping that we're able to continue the economic recovery and continue to add jobs to the economy. That's my focus right now."

Currently, 7.5 million Americans are set to lose all of their benefits when the pandemic aid lapses nationwide in September, according to a report from the left-leaning Century Foundation. Walsh said it's still too early to look at impacts on jobs gains or unemployment insurance.

"We've had great growth in the last three months. If we continue to grow at this pace, our economy will continue to recover. The issue is, kind of the wild card here, is the Delta variant," Walsh said. "What does that mean in cities and towns across America?"