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Unemployment rate falls to 5.8% — lowest rate since pandemic erupted

Biden touts May jobs report as unemployment dips
Biden touts May jobs report as unemployment d... 00:24

U.S. employers added a solid 559,000 jobs in May, a sign the economy continues to expand as consumers and businesses resume their normal activity amid a nationwide decline in COVID-19 infections.

The nation's unemployment rate fell to 5.8% as more jobless workers were hired and others left the labor force, meaning they've stopped looking for work altogether and were not counted as unemployed. It is the lowest jobless rate since March of 2020, when unemployment was 4.4%.

Leisure and hospitality companies led the gains, with 292,000 new jobs. The education sector added 140,000 jobs as schools returned to in-person learning. Employers in health care and social assistance added 46,000 jobs, while manufacturing, wholesale trade and transportation and warehouses gained about 20,000 jobs each.

The latest job figures were slightly lower than expected. Economists had predicted an increase of about 650,000 jobs last month.

"It's great to see a pickup to job growth, but it would have been better to see a larger acceleration," Nick Bunker, economic research director for the job site Indeed, said in a note. "Adding over a half million jobs in one month is a solid pace of growth, but we will need to keep up this tempo for quite some time to get back to a semblance of the pre-pandemic labor market."

Worker shortage?

The unemployment rate ticked down for all major demographic groups, including men, women and teenagers, and for all races and ethnic groups. Still, the unemployment rate for Black workers, at 9.1%, was 4 percentage points higher than the rate for Whites.

As economic activity has picked up, many businesses — especially those that offer lower wages — have reported difficulty finding workers. A Federal Reserve analysis this week found that businesses across the nation, from restaurants to retailers to manufacturers, said they were having trouble finding employees, with some responding by raising wages.

Meanwhile, the sector that has complained the loudest about labor shortages — leisure and hospitality companies such as restaurants and hotels — has also led job gains in recent months, hiring 850,000 people from March to May.

"That blows a gigantic hole in arguments that unemployment insurance is serving as a disincentive" for jobless Americans to return to work, Joe Brusuelas, chief economist for international accountancy RSM, told CBS MoneyWatch.

On average, employers have added about half a million jobs every month this year, slowly regaining ground after the coronavirus last year led to historic job losses.

"It's a mess"

Although hiring has been steady this year, there are still 7.6 million fewer employed workers today than in February of 2020, before the pandemic.

Half of U.S. states are ending unemployment benefits early, with officials arguing that overly generous payouts are discouraging people from seeking work. However, the economic rationale for cutting off federal cash is tenuous, most economists say. Many workers losing benefits have tried unsuccessfully to get work while dealing with caretaking obligations.

Angel Pitzer, a 38-year-old mother of five living in Cincinnati, Ohio, estimated that she's submitted roughly a thousand job applications since her housecleaning business was put on ice by the pandemic last year. Pitzer fears that a criminal record may be making employer reluctant to hire her, even as she noted that some local stores are shortening their hours due to staffing shortages.

"The pandemic unemployment assistance has kept us afloat," said Pitzer, whose benefits are set to end in just a few weeks. She has signed up to deliver food via DoorDash, but hasn't gotten many orders.

In the meantime, she and her fiance, a handyman, are making ends meet by doing odd jobs for their landlord and scouring their neighborhood for discarded appliances.

"It's a mess. I don't understand why these people think that nobody wants to go to work," Pitzer said. "I would much rather go to work and depend on my income than put up with their crap."

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