U.S. Jobs: May Brings Modest Bounce Back
In what is starting to look like something of a see-saw, U.S. job numbers for May show things on a modest upswing. With 559,000 jobs added for May, both of the previous months also got a boost. March increased from 770,000 to 785,000 jobs (+15,000), and April's dismal count of 266,000 new jobs increased to 278,000 (+12,000).
Things continue to improve, but in an up-again, down-again fashion that's only slowly making up for staggering job losses of 701,000 in March 2020 and 20.8 million the month after that. According to NPR's on-air coverage this morning, 15 months into the pandemic the jobs market has clawed back a bit more than half of the jobs lost in those two months, with between 8 million and 10 million jobs still in need of filling to re-establish pre-pandemic parity.
What's Holding Job Growth Back?
According to NPR, the Minneapolis branch of the Federal Reserve, and other sources, three major factors explain why people aren't rushing back to work in larger numbers:
1) Many workers, especially those in face-to-face service industry jobs, are still hesitant about the possible health implications, for themselves and family members, of returning to work and exposing themselves to potential infection.
2) The ongoing $300-a-week unemployment benefit extension makes it less financially compelling for low-wage workers to return to work. That said, most Republican states are canceling this benefit later this month, so that should no longer be a hindrance in the near future. I'm not sure I buy into this assertion (many studies show that workers would rather earn even a slightly lower wage rather than accept handouts), but it is what it is.
3) Many other workers, especially women with school-age kids (or younger) are still sitting on the sidelines because of child-care concerns. Most analysts expect this situation to be relieved in late August or early September when most U.S. kids aged 4-to-5 and older will return to the classroom.
Nevertheless, May saw unemployment drop by three-tenths of a percent, from 6.1 to 5.8 percent. Hopefully, this see-saw will keep swinging up for a while because many businesses are reporting difficulty in filling open positions at the moment, especially in service sector jobs.
Where Did May Growth Occur, and in What Measures?
Here is what the latest Employment Situation Summary says about where jobs were added in May:
Leisure and hospitality added 292,000 jobs, with 186,000 of that in eating and drinking places. Amusements, gambling and recreation grew by 58,000, and accommodations added 35,000. This sector is still down by 15 percent(2.5 million) from February 2020.
Public and private education added 144,000 jobs, reflecting a continuing return to face-to-face education (53,000 in local government education, such as public schools; 50,000 in state government education; and 41,000 in private education). Overall employment in this sector is still down by just under 1.1 million jobs from February 2020.
Healthcare and social assistance grew by 46,000 jobs, with health care up 23,000, and social assistance by the same number, mostly in child day care (up 18,000 jobs). Overall jobs in this sector are down by 765,000 jobs vis-�-vis February 2020.
Information (the home sector for all of us tech workers) added 29,000 jobs in May (the first time it's gotten a line item in this report since before the pandemic), but jobs are down since February 2020, albeit by a relatively small 193,000.
Manufacturing added 23,000 jobs in May, mostly in motor vehicles and parts. Employment is down by 509,000 relative to February 2020.
Transportation and warehousing also added 23,000 jobs in May, partly in support activities for transportation (+10,000) and in air transport (+9,000). Relative to February 2020, this sector is down by 100,000 jobs.
Wholesale trade added 20,000 jobs for May, with 14,000 of that gain going to durable goods. Overall, that sector is trailing February 2020 employment levels by 211,000 jobs.
Professional and business services added 35,000 jobs for May, with accounting and bookkeeping up by 14,000, and temporary help up a miniscule 4,000. The overall sector is down by 708,000 jobs compared to February 2020.
Construction and retail trade both suffered job losses, with construction losing 20,000 jobs and retail losing 6,000 jobs. Other sectors — namely, mining, financial activities, and other services — were relatively flat.
Wages show a bit of action with an increase in the average hourly earnings of $0.15, to $30.33, for May after a $0.21 increase in April. Rising demand for workers and the ongoing pandemic recovery appear to be exerting modest upward pressure on wages at long last. That's complicated a bit by a recent upswing in inflation, which now stands at 4.2 percent according to the U.S. Inflation Calculator.
Many economists see this as a blip, and expect (or fervently hope) this will drop in the months ahead. If it continues, it could change outlooks significantly.
Gosh, that's a great question. Things are pulling trends up and down, so it's hard to find patterns or predictions in the data. Looking at the "jobs added" graph for May 2020 through May 2021, we can see that while growth has slowed it's also yo-yo-ing. That means it's anybody's guess if the numbers will increase or decrease when the June report emerges.
That said, most economists believe that jobs numbers will increase over the June through September timeframe because of increasing vaccination rates, canceling of added unemployment benefits, and the return of school-aged kids to the classroom. As always, only time will tell. Stay tuned!