Unemployment rate stays steady at pandemic low of 3.6 percent – The Washington Post

Written by Amanda

U.S. employers added 390,000 jobs in May, marking another blockbuster month in the labor market that points to sustained economic growth even as head winds mount.

The unemployment rate remained unchanged at 3.6 percent, the Labor Department said Friday.

“There are signs that the white-hot labor market is cooling,” said Sarah House, a senior economist at Wells Fargo. “But if you step back and look at the big picture, this is still an exceptionally strong pace of hiring.”

The burst of new jobs, which could contribute to heightened inflation, adds even more fuel to the Federal Reserve’s already aggressive plan to raise interest rates.

The labor market has proved to be a surprisingly resilient pillar of the economy. The pace of growth eased slightly in May — following nearly 12 months of at least 400,000 new jobs per month — although economists were expecting a more marked slowdown.

“Despite the slight cool-down, the tight labor market is clearly sticking around and is shrugging off fears of a downturn,” Daniel Zhao, a senior economist at Glassdoor, wrote in an email. “We continue to see signs of a healthy and competitive job market, with no signs of stepping on the brakes yet.”

President Biden on June 3 delivered remarks on the May jobs report while acknowledging “a lot of Americans remain anxious” about inflation. (Video: The Washington Post)

In all, U.S. employers have added more than 6.5 million jobs in the past year, with many of those gains concentrated in industries such as manufacturing, hospitality and transportation, which are racing to keep up with booming demand. That trend continued in May, with broad growth across almost all sectors.

One notable exception, though, was retail, where employment fell by 61,000 last month, as consumers shifted spending away from goods to services, such as travel, entertainment and dining out.

Consumers are shifting their spending from goods to services

In Elysburg, Pa., Knoebels Amusement Resort is going to great lengths to recruit workers. It has raised starting wages from $10 to $11 an hour and begun offering hourly bonuses and subsidized bus rides to and from work. Last year, the park raffled off a Chevy TrailBlazer to attract applicants.

“The overall job market is certainly tough, and we’ve struggled,” said Jon Anderson, the park’s human resources director. “But this year, things are getting better: We’re on track to hire 1,900 team members, so we’ve already exceeded last year’s peak employment.”

Overall labor market conditions remain extremely tight even as the pace of growth slows. There are two open positions for every job seeker, with many businesses — particularly in lower-wage sectors such as hospitality — complaining of widespread labor shortages.

The strength of the job market has been a source of optimism for policymakers at a time when other parts of the economy are flashing warning signs. The U.S. economy unexpectedly shrank in the first three months of 2022, raising fears of an economic downturn. But Fed officials continue to point to the record-tight labor market as a reason they can raise interest rates without derailing the overall economic recovery from the shocks of the early pandemic.

“The labor market has continued to strengthen and is extremely tight,” Fed Chair Jerome H. Powell said last month. “It doesn’t seem to be anywhere close to a downturn. Therefore, the economy is strong and is well positioned to handle tighter monetary policy.”

U.S. may be barreling toward recession in next year, more experts say

Even so, a growing chorus of executives and economists are voicing fears that an ongoing war in Ukraine, combined with the Fed’s tightening, could trigger a recession. JPMorgan Chase chief executive Jamie Dimon this week warned of an economic “hurricane,” though he said the storm’s severity was still unclear. And Elon Musk said he planned to cut 10 percent of jobs at Tesla, citing a “super bad feeling” about the economy, Reuters reported.

The economy is still short about 800,000 jobs from pre-pandemic levels but is expected to close that gap this summer. Public-sector hiring — at state and local governments, schools and education boards — picked up in May, adding about 52,000 jobs nationwide after months of stalled hiring.

Overall, the public sector has recouped 58 percent of the jobs lost during the pandemic, compared with 99 percent of private-sector jobs, according to Julia Pollak, chief economist at ZipRecruiter.

“The jobs recovery has really lagged in the public sector, but things are finally turning around,” she said. “State and local governments and education boards are belatedly raising wages are finally learning how to recruit and retain workers in a tight labor market.”

Ash Taylor recently landed a job as a technical writer for the state of Oklahoma less than two weeks after she applied. Taylor, who is disabled, said she was drawn to the job because of its generous benefits package. She also got a hefty pay bump, to $50,000 a year from $30,000 at her last job.

“Things moved very fast — they needed to fill the position. and I knew I wanted to work there,” the 28-year-old said. “This is the highest-paying job I’ve ever had. I threw out a number, and they were happy to pay it.”

Job openings in April remain near record highs, U.S. employers report

For workers such as Taylor, the strong job market translates to increased bargaining power. Millions of Americans continue to quit or switch jobs each month in search of higher pay or better conditions. Average hourly earnings continued to tick up in May, by 10 cents an hour, to $31.95. Overall wages have increased by 5.2 percent in the past year, although they have not kept up with inflation, which has risen 8.3 percent in the same period.

In Columbia, Mo., Isabelle Shannon recently quit her marketing job for a lower-paying but more flexible position. The 27-year-old searched for more than a year before finding the right fit. And, even though she took a 25 percent pay cut and gave up two months of paid maternity leave, she says she is much happier in her new role.

“I finally have a job where I feel heard and have more control over my day,” said Shannon, who is pregnant with her third child. “I had to take a step back and figure out what I value in an employer.”

Source: washingtonpost.com

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Hi there, I am Amanda and I work as an editor at impactinvesting.ai;  if you are interested in my services, please reach me at amanda.impactinvesting.ai