One month after the dismal April 2021 jobs report, the subpar 559K jobs were added in May 2021 which was another miss to expectations of 674K – as a reminder, we need to be adding at least 1 million jobs every month to recover to pre-pandemic level. Widely expected April’s report was upwardly revised by 278K upward. What this shows us is that the Obama-era “job market” economy is back with a vengeance. As you can see we have recovered only about 60% that was lost after the covid19 “pandemic.”
The unemployment rate fell to 5.8% from 6.1%. The reason why the unemployment rate fell is that 160,000 people left the labor force in May. That’s not what you’d like to see in an economic recovery. With so much of the recent labor market discourse focusing on widespread shortages resulting from Uncle Sam’s generous unemployment benefits, 15 million people are still collecting some form of weekly unemployment benefit.
Where was the job growth?
- Employment in leisure and hospitality increased by 292,000, as pandemic-related restrictions continued to ease in some parts of the country.*Nearly two-thirds of the increase was in food services and drinking places (+186,000). Employment also rose in amusements, gambling, and recreation (+58,000) and in accommodation (+35,000).
- Employment in leisure and hospitality is down by 2.5 million, or 15.0 percent, from its level in February 2020.
- Employment increased in public and private education, reflecting the continued resumption of in-person learning and other
school-related activities in some parts of the country.
- Employment rose by 53,000 in local government education, by 50,000 in state government education, and by 41,000 in private education. However, employment is down from February 2020 levels in local government education (-556,000), state government education (-244,000), and private education (-293,000).
- Health care and social assistance added 46,000 jobs in May.
- Employment in health care continued to trend up (+23,000), reflecting a gain in ambulatory health care services (+22,000).
- Social assistance added 23,000 jobs over the month, largely in child daycare services (+18,000). Compared with February 2020, employment is down by 508,000 in health care and by 257,000 in social assistance.
Another point: one month after the BLS’ Household Survey showed that all job gains in April were by men with women actually losing positions, May was payback month with jobs held by women soaring by 398K jobs, while men added just 45K, making the two-month gains an overall win for women (390K) over men (381K). This observation should put to rest the flawed narrative that much of the lack of return to the labor force is because women are somehow stuck at home due to lack of childcare.
From Axios: What it means for President Biden: There are still 7.6 million fewer Americans employed than there were pre-pandemic. At this rate, that gap won’t close for another 13 months. What it means for Wall Street: The Fed wants to see a strong burst of hiring before it changes its monetary policy stance. This jobs report, while dubious, Biden may want even more stimulus even if the subdued rosy picture he is trying to paint is realized. Here are Biden’s remarks on the recent jobs report.
Biden touts the addition of 1,589,000 full/part-time jobs that returned since he has been in office. But one only has to factor in that the COVID-19 vaccines became available as he assumed the presidency and the largest economies of our country opened back up. California and Texas populations entered back into the workforce and Florida expanded their open economy further. The job numbers in the first three months of this presidency are not related to policy but tied to lockdowns lifting and people who had jobs before Pandemic lockdowns being allowed to re-enter the workforce.
“The number of Americans counted as not in the labor force — meaning they didn’t have a job and were not looking for one — increased by 160,000 in May to 100,275,000. Of those 100,275,000 counted as not in the labor force, BLS said 2.5 million persons were prevented from looking for work due to the pandemic. This measure is down from 2.8 million the month before.”
Meanwhile, inflation rages on. April 2021 report showed consumer prices rose 4.16%. The inflation chart is heading in a very disturbing direction.
A sinking reality sets in for the future. Businesses need workers – but cheap workers. Rising input prices squeeze their margins, but at the same time, businesses have marginal pricing power. Hence, they can’t pay more for the workers. In short, under this new Biden economic structure, many of these business models we see today simply are not viable. The Economic restructuring will occur one way or another. One can manipulate the markets for a time, but in the end, the market always wins.
If you aspire to be a short-order cook working 6-days a week at minimum wage – life will be good under Biden’s economy.