Key takeaways from May jobs report

Politicians, economists and lawmakers are all pouring over the May jobs report that showed the U.S. added jobs as the unemployment rate fell.

Specifically, the economy gained 559,000 new workers and the jobless rate dropped to a pandemic-low of 5.8 percent.

Employers more than doubled April’s disappointing jobs gain, but last month’s total still fell short of Wall Street’s expectations, and well below the 1 million-plus monthly hauls some had anticipated earlier.


Economists often caution that the monthly jobs report is just a snapshot of the labor market, particularly given the unique ways COVID-19 has damaged and shaped the economy, but May’s numbers still provide important insights into how the U.S. is recovering from the pandemic.

Here are five key takeaways from Friday’s Labor Department report.

Hard-hit sectors continue their strong recovery

May brought more sorely needed jobs to industries derailed by the COVID-19 pandemic that are beginning to recover as the virus comes under control in the U.S.

The leisure and hospitality sectors gained 292,000 jobs, with 186,000 workers added to payrolls at restaurants and bars.

“While leisure and hospitality still accounts for a third of the total jobs shortfall, a summer boom in hiring should allow the sector to recover most of the jobs lost by year-end,” wrote Lydia Bossour, economist at Oxford Economics in a post-report analysis.

The U.S. also added 53,000 jobs in local public schools, 50,000 in state schools, and 41,000 in private schools — all of which suffered heavy losses amid coronavirus lockdowns this past year.


Retail, however, lost 6,000 jobs, underscoring the uncertainty facing a sector that was suffering before the COVID-19 pandemic wiped out brick-and-mortar stores across the country.

The construction sector also lost 20,000 jobs, which industry experts and economists attribute to soaring prices for lumber and other materials in short supply.

Hard-hit demographics are still lagging

Some of the industries hindered the most by COVID-19 are rebounding, but many of the demographic groups who’ve suffered disproportionate burdens continue to trail the rest of their peers.

The Black unemployment rate was 9.1 percent in May, well above the 5.1 percent unemployment rate for whites and 5.5 percent for Asian Americans. The Hispanic unemployment rate also remained high, at 7.3 percent.

“While the overall unemployment rate has dropped, the rate for workers of color remains at crisis levels,” wrote Janelle Jones, chief economist at the Labor Department, in a Friday analysis.

“While Black and Hispanic workers face unemployment rates at this level, we’re still a long way from economic equity,” Jones added. 

Labor force participation is stubbornly frozen

The percentage of working-age adults who are employed or actively seeking jobs was largely unchanged at 61.6 percent in May, sitting 1.7 percentage points below its February 2020 level.

With millions of Americans still out of the labor force, employers are scrambling to hire workers and struggling to bring on enough staff to meet rising demand. The challenges have sparked an intense debate among politicians and economists about the causes of the imbalances.

More than half of U.S. governors — all Republicans — have pulled their states out of the expanded unemployment benefits renewed by President BidenJoe BidenBipartisan lawmakers press Biden to ‘immediately’ evacuate Afghans who helped US forces Chris Wallace: Backlash over Fauci emails ‘highly political’ Democrats claim vindication, GOP cries witch hunt as McGahn finally testifies MORE, arguing they disincentivize returning to work. But Democratic lawmakers and many economists say other factors such as health concerns and school closures are the primary constraints on the labor force.

Joe Brusuelas, chief economist at audit and tax firm RSM, argued Friday that the strong rebound in the relatively low-paying leisure and hospitality sector proved that expanded unemployment benefits were not keeping workers from taking open jobs.

“If that assertion was true, one would not be observing such jobs gains in the sectors with the lowest pay,” he wrote.

Wages are rising — but from pandemic depths


Right-leaning economists concerned about labor shortages causing inflation, as well as progressives who’ve long raised alarms about tepid wage growth, have cited rising earnings as a sign of growing worker leverage.

Average hourly earnings rose 0.5 percent in May, with wage growth hitting a 2 percent rate after falling sharply during the onset of the pandemic.

“This is a situation you’d expect with employers’ demand for workers growing much faster than workers are returning to the labor market. Labor demand is booming, and labor supply is not keeping up,” wrote Michael Strain, director of economic policy studies at the American Enterprise Institute, a right-leaning think tank.

Even so, some progressives say the spike in wage growth is more reflective of pandemic quirks than sustainable gains.

“Weekly wages for typical workers in leisure and hospitality translate to annual earnings of $20,714, far (far) lower than in other sectors, even with the recent acceleration. Those increases are not going to create broad wage pressure,” tweeted Heidi Shierholz, policy director at the Economic Policy Institute, a liberal think tank. She added that measured wages included tips, which had fallen off substantially when dining was banned or limited.

“Recent wage growth in restaurants may not be largely from employers raising pay to attract workers, but from workers’ hourly tips—which plummeted during the downturn—normalizing as customers return,” she added.

Political battle over the recovery will rage on


Overall, the May jobs report showed an economy on the cusp of a major comeback that is still sorting through the fits and starts of bouncing back from an unprecedented downturn. At the current pace of job gains, the U.S. is on track to fill the COVID-19 hole of 8 million jobs by the end of 2022 — not as quickly as most would like.

The solid but unspectacular report has given both Democrats and Republicans ample ammunition to claim that their approach to the economy is better than the other’s.

Biden cited the jobs gain as proof of the success of his economic agenda, while Republicans argued his expansion of jobless benefits and massive stimulus plan have kneecapped the recovery. The reality doesn’t fit either narrative, but the economy nonetheless appears to be moving in the right direction.

“The jobs recovery is nonetheless poised for an impressive run in coming months,” wrote Boussour of Oxford Economics.

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