Why Today’s Upbeat Unemployment Report Still Not Good News
In contrast to the gloom that has reigned over the economy since the start of the coronavirus pandemic, the country’s employment status actually improved in May, according to an employment report released today. The unemployment rate fell to 13.3% and the number of jobs increased by 2.5 million. This means that the April unemployment rate, 14.7%, remains the highest since the Bureau of Labor Statistics began tracking monthly employment data.
According to the BLS report, the increase in employment is due to a “limited economic recovery” in May, as states and municipalities began to resume work after shutdowns aimed at containing the spread of the coronavirus. Industries that saw an increase in employment were hospitality and retail.
But while this report sounds upbeat at first glance, it doesn’t mean that our concerns about employment and the economy are behind us.
“We still need to take a step back and remember that the unemployment rate remains higher than the peak during the financial crisis and great recession,” said Mark Hamrick, senior economic analyst at Bankrate .
The unemployment rate before the start of the pandemic was below 4%. And even during the worst point of the recession 10 years ago, it hovered at nearly 10%.
“However, the strong rebound suggests that investors who have raised share prices in recent weeks were correct in expecting a significant improvement. It remains to be seen if these levels will continue, ”Hamrick said.
Hamrick noted that 15 million unemployed Americans believe they are only temporarily out of work. If the layoff periods end as expected and the re-hiring efforts begin quickly, we may see additional data growth in June and July.
But everything will depend on continuing to contain the coronavirus at a time when many people are reluctant to return to their daily lives and even start traveling again.
Another area worth looking at, but for less optimistic reasons: race-based unemployment. Much of the decline in the unemployment rate in May was due to the employment of whites.
The Washington Center for Fair Growth indicated that unemployment among blacks actually increased slightly, from 16.7% to 16.8%. Unemployment among Hispanics fell from a whopping 18.9% to 17.6%.
Meanwhile, the white unemployment rate fell from 14.2% to 12.4%.
So no, this is not the recovery we all quietly hoped for. We’re not there yet. Thirty million people applied for unemployment benefits during the closure due to the pandemic, and many are still waiting to receive these weekly benefits, even if they are also waiting to learn about the fate of the lost jobs.
The real economic recovery will not begin until those who faced income disparities this spring are able to consolidate their financial position and return to the labor market.
Even so, there is a long way to go to bring unemployment down to levels indicative of relative economic stability, rather than serving as a constant reminder that we are still facing multiple crises at once.
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