Employers created hundreds of thousands of jobs in the past month as coronavirus infections subsided, vaccinations spread and businesses reopened, the government reported on Friday. But the labor market’s recovery from the pandemic is proving bumpy.
The hopes that the first wave of vaccinations would be followed by a strong and steady increase in new hires have so far proven to be too optimistic. Job creation doubled in May compared to the previous month, but remained below most forecasts. And wage increases that jumped up and down this year may continue their uneven progress in summer.
Several economists said they didn’t expect the hiring pace to pick up at least until the fall, when more schools are fully reopened, much of the population is vaccinated and pandemic unemployment benefits end.
“It’s likely going to be a bumpy ride from here through September,” said Rubeela Farooqi, US chief economist at High Frequency Economics.
This latest report from the Department of Labor highlighted the puzzling fact that millions remain unemployed despite many employers complaining of labor shortages.
President Biden as very recognized on Friday. “As we continue this recovery, we will hit some bumps along the way,” he said. “We can’t restart the world’s largest economy like flipping a light switch.”
“That much is already clear,” he added. “We are on the right path.”
Republicans used the report to argue exactly the opposite. The members of the party in the Committee on Ways and Means of the House of Representatives, in a press releaseHe pointed to “Main Street companies dying to get their employees back on their feet and far too many Americans are left on the sidelines”.
The number of employees rose by 559,000 Workers in May, and the unemployment rate fell to 5.8 Percent, below 6 percent for the first time since the pandemic began.
The average monthly profit over March, April and May was approximately 540,000 positions. If this rate continues, it will take well into 2022 for the labor market to return to pre-pandemic levels.
The report is unlikely to deter the Federal Reserve from his caution against rising interest rates. “I would love to see a little more on the job market to really see that we are on the right track,” said Loretta J. Mester, president of the Federal Reserve Bank of Cleveland, on CNBC Friday.
Almost half of the small business owners questioned from the National Federation of Independent Business in May said they were having difficulty filling vacancies.
“I think we all expected that the reopening would unleash very strong energy,” said Carl R. Tannenbaum, Northern Trust’s chief economist. “But I also think we underestimated how strong that would be. One industry after another is not fully prepared for what people want to do. “
Many employers have blamed the temporarily increased federal unemployment benefit for the labor shortage 25 Republican-led states plan to withdraw of some or all of the programs before the September 6th expiration date.
Most economists have resisted blaming the expanded benefits, saying the reality is more complicated. A Lack of child care, persistent health concerns, low wages, and competing priorities likely play a bigger role, they say. Childcare employment, for example, is only 70 percent of its pre-pandemic level.
“Is there a labor shortage?” asked Ms. Farooqi from High Frequency Economics. “Absolutely not in my opinion. There is a ramping-up effect and it will continue for a while. You have to reckon with some friction. “
At the beginning of the pandemic, job postings collapsed much faster than job searches, said Julia Pollak, labor economist at the online job exchange ZipRecruiter. Now there is a reverse dynamic: Postings have increased much faster than search activity.
She also said that there was a discrepancy between the positions offered and the positions sought. More than half of job seekers would like to work remotely, while only 10 percent of employers offer this option.
And surveys by ZipRecruiter found that 44 percent of respondents wanted to work remotely even after the pandemic ended, Ms. Pollak said.
Government support related to the coronavirus may have given some people a little more leeway to choose a job they think would be well suited. A third of job seekers said they felt financially pressured to take the first job offered, compared to half who felt the same crisis before the pandemic, according to ZipRecruiter.
There may also be other reasons for the fact that the employment rate, which fell slightly to 61.6 percent in May, has not recovered. The pace of early retirement accelerated during the pandemic and freed about 1.5 million workers from the labor force. And more than a million people said they hadn’t worked last month because of illness.
Even people with a larger financial cushion can take some time as the pandemic subsides to enjoy the reopening and visit relatives and friends for the first time in more than a year.
“Free time is worth more this summer than last summer because people can actually travel,” said Jed Kolko, chief economist at Indeed’s job search site. “Also, people are optimistic about the economy,” he said, so they may be willing to wait a little before getting a job.
May saw the biggest job gains in the leisure and hospitality industry as people celebrated falling Covid-19 risk by flocking back to bars and restaurants. The education, health and social assistance sectors also saw growth. Construction jobs fell, a trend some economists linked to supply chain disruptions.
The competition for labor can be fierce. “Those were the best five months of my career,” said Tom Gimbel, who has been in recruiting for 25 years. “Business is up 40 percent compared to two years ago,” said Gimbel, CEO of LaSalle Network, a Chicago recruiting company responsible for recruiting entry-level executives.
Average hourly earnings of all workers rose 15 cents an hour in May, after rising 21 cents in April. The increase continues with a pattern of strong wage growth, especially for those on the lower end of the scale. However, the smaller increase may also indicate that employers do not feel as pressured to offer more money to attract workers.
Mark Herrington, the CEO of OnSolve LLC, an Alpharetta, Georgia-based venture capital company, plans to add 90 additional employees by the end of this year, mostly in sales and engineering. “We had problems finding people,” he said, adding that people seemed reluctant to change jobs during the pandemic.
Some job seekers finally breathe easy.
Todd Heft lost his job in digital marketing last spring. He took a paycheck from contract work for six months, but has been unemployed since October. He began looking for a new job in earnest in January but was surprised at how few options there were as the pandemic continued to rage.
Then in April he said, “A flood of recruiters has started reaching me.” Although he has not yet got a new job, he is “extremely optimistic” that he will have work in the next month as the economy turns further improved.
“Right now I’m extremely confident,” said Mr. Heft, who lives in Bethlehem, Pennsylvania.
Other job seekers say they have struggled to get hired at a level comparable to their previous positions.
Jenny Crowley, 40, worked in marketing for a professional education and entertainment company in Chicago before her industry “stalled” during the pandemic. She has been urgently looking for a job since July; it is estimated that she has applied to over 400. But she only had a few interviews and no job offers.
Some of her friends find themselves in similar situations – an unfortunate reality that nonetheless offers some kind of unusual consolation. “This is not an isolated incident for me at all, which is calming and frustrating at the same time,” said Ms. Crowley.
“I think there is a lot of competition in the job market right now,” she said, “and I think a lot of it is in the right place at the right time.”
About 741,000 fewer Black women were employed in May than in February 2020, a decrease of 7 percent. Around 890,000 less Hispanic women were employed by 7.2 percent. Though Americans of all races and genders got jobs – and women actually did bigger gains than men in May – these persistent deficits underscore that there is still a long way to go before the labor market returns to its former strength.
In contrast, teenager are pouring back into the job market, working faster than it has been in more than a decade.
Sydney Ember, Ben Casselman and Jeanna Smialek Reporting contributed.