The May Jobs Report It is out. Does it show a healthy job recovery on the way to a full recovery? Or do we see a gap of 8 million fewer jobs compared to pre-pandemic levels, with high unemployment for Blacks and Hispanics, and 1.7 million older workers pushed into early retirement? The answer is both. We need job quality, not just job growth.
Jobs increased in May by 559,000 and the unemployment rate fell to 5.8% from 6.1% in April. That’s good news, although the number is less than the 674,000 predicted by a Wall Street Journal poll of economists. And it is far below the 978,000 forecasted by payroll company ADP.
Economist at the Economic Policy Institute (EPI) Elise Gould, one of our best analysts on labor data, sees the report as a “promising sign that the recovery is on the right track.” But he also notes that the “job shortfall” compared to pre-pandemic trends is “in the range of 8.6-10.7 million” of additional jobs. If this trend continues, Gould says the unemployment rate could hit 4% “by mid-2022” with a full recovery before the end of that year.
Other estimates are more optimistic. The The Valuable “Jobs Calculator” from the Federal Reserve Bank of Atlanta says we could reach 4% unemployment in about six months with this monthly level of increase, but only if the labor force does not increase. That’s unlikely, as a stronger labor market is likely to attract more workers, and accommodating that larger workforce reinforces Gould’s longer estimate for full recovery.
Republican governors are giving unemployed workers an extra push by ending their emergency pandemic unemployment benefits. Up to 24 states, all with Republican governors, have announced that they will end fringe benefits in mid-summer instead of the September end date. Idaho Governor Brad Little’s The justification is typical of these governors: “we don’t want unemployed people. We want people to work. “
These governors, along with business organizations, believe supplemental unemployment insurance is causing a labor shortage in their states, especially in lower-paying hospitality and food service jobs. exist daily stories in the media about restaurants and other employers who can’t find workers.
But some economists don’t think unemployment insurance is the problem. A representative economic study of Yale university he says “we found no evidence that more generous benefits discourage work.” Economist Arindrajit Dube at the University of Massachusetts he looks at the large number of new jobs being filled, and concludes that the economic reopening “floods everything on the unemployment insurance front.”
If workers are slow to return, what could be causing this? First, there is no adequate childcare for workers (especially women) with family responsibilities. Daycare costs nationwide for four-year-olds on average about $ 175 per week, about 14% of median household income. For a full-time worker on the federal minimum wage, the cost of child care could be more than half of your annual income.
Second, employers could raise wages. That’s what the Economics 101 textbook suggests. Amazonas
The so-called “labor shortage” appears to be highly concentrated in leisure and hospitality jobs, the sector most affected by Covid-19, which is now on the mend. EPI economists Josh Bivens and Heidi Shierholz They say there is “very little reason to worry that the leisure and hospitality workforce shortage will soon spread to other sectors.”
Maureen conway from the Aspen Institute Workforce Strategies Initiative He says it clearly: “We are not in a labor shortage. We are in a wage shortage … We have a good shortage of jobs. “The Aspen initiative advocates for a variety of strategies to improve jobs, including career-focused training and education, working with employers to design better quality jobs and pay special attention to the needs of working families and reduce discrimination against black and other non-white workers.
President Biden advocates a number of essential steps, including raising the federal minimum wage to $ 15 an hour and adding more workers to unions. And Biden’s economic policies are fueling economic and job growth, while the Administration works to keep increasing vaccines, a critical step in economic recovery. (Many of the Republican governors who are ending supplemental unemployment insurance are also the worst vaccination rates in the country.)
So May’s report is a good one: The economy, under Biden’s leadership, is on a growth path. But many of our jobs still pay very little, and the growth of the job market alone will not end racial discrimination at work or provide adequate support for working families.