Unemployment drops in May to 13.3 percent as states reopen

The rate reflects parts of the economy reopening in the wake of the coronavirus pandemic.

The unemployment rate dropped to 13.3 percent in May, amid a push for a reopening economic rally, the Bureau of Labor Statistics reported Friday.

The economy gained 2.2 million jobs last month, as states started relaxing stay-at-home orders and opening for business.

President Donald Trump, who has been prodding governors to reopen state economies, took credit for the reversal.

“Really Big Jobs Report.” Trump tweeted in reaction to the numbers. “Great going President Trump (kidding but true)!” He also announced a Friday morning press conference at the White House to discuss the report.

The unexpected jump follows a historic 14.7 percent unemployment rate in April, the highest recorded since the economic downturn of the 1930s.

Economists were bracing for an unemployment rate close to 20 percent in the May report, aligning with weekly applications for unemployment insurance climbing above 40 million in recent weeks.

The payroll company ADP reported a 2.8 million drop in May of nonfarm private payrolls earlier this week.

“The biggest payroll surprise in history, by a gigantic margin, likely is due to a wave of hidden rehiring,” Ian Shepherdson, chief economist at Pantheon Macroeconomics wrote in reaction to the number.

“Businesses which let people go in large numbers in March didn’t need to post their intention to bring people back on Indeed;” he said, “they just needed to call/text/email.”

The unexpected number likely understates the extent of the economic pain felt last month. Economists warned large numbers of people have been classifying themselves as employed but absent from work in the survey, which can artificially suppress the unemployment rate.

The figure also reflects the situation in the middle of May, which is when the agency surveys Americans to get a snapshot of the workforce.

While the unemployment rate for adult women, adult men, white workers, Hispanic workers dropped from April to May, it rose slightly for black workers to 16.8 percent.

Notably, the number of workers who say they have permanently lost their job, increased by 295,000 in May to 2.3 million.

The leisure and hospitality industry, which was battered by state stay-at-home orders and shed more than 8 million jobs in April and March, added 1.2 million jobs last month.

But even as jobs gains were seen elsewhere, employment in government continued to decline, shedding 585,000 jobs in May for a total loss of 1.5 million jobs in two months.

Most of those losses were in local government — a major employer for black workers, and one factor contributing to the black unemployment rate holding steady even as the overall rate declined.

The jobless rates for teenagers (29.9 percent) and Asians (15 percent) also saw little change from April to May.

Heidi Shierholz, former chief economist at the DOL, noted that while May’s job growth is a positive sign, the U.S. jobs level “remains in absolute crisis.”

“In May, we added 2.5 million jobs,” wrote Shierholz, who is now with the Economic Policy Institute. “But in March and April, we lost 22 million, so we are still down 19.6 million jobs.”

The damage to the economy is forecast to be long lasting. The nonpartisan CBO estimates that unemployment won’t even near pre-pandemic levels — which was at 3.5 percent in February — by the end of next year.

The May jobs report lands amid a debate in Washington over whether to extend the unemployment benefit program created to help jobless Americans weather the pandemic.

With more than 40 million unemployment claims filed throughout the pandemic, Republicans argue that an additional $600 weekly unemployment payment authorized in a March assistance bill will discourage Americans from getting back to work and stymie the recovery.

But, former congressional economists from both Republican and Democratic administrations warned lawmakers earlier this week that more aid may be needed.

A failure to extend the benefits will “hinder our ability to recover,” said Douglas Elmendorf, who led CBO from 2009 to 2015. He said benefits should stay in place until the national jobless rate falls back down to 6 percent.

This blog originally appeared at Politico on June 5, 2020. Reprinted with permission.

About the Author: Rebecca Rainey is an employment and immigration reporter with POLITICO Pro and the author of the Morning Shift newsletter. Prior to joining POLITICO in August 2018, Rainey covered the Occupational Safety and Health administration and regulatory reform on Capitol Hill. Her work has been published by The Washington Post and the Associated Press, among other outlets.

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