WASHINGTON, June 4 (Xinhua) -- U.S. labor market recovery picked up some steam in May, rebounding from April's hiring slowdown. But with many employees unable to return to work due to pandemic-related reasons, economists said businesses are struggling to fill job openings.
U.S. employers added 559,000 jobs in May, following an upwardly revised job growth of 278,000 in April, the Labor Department's Bureau of Labor Statistics reported Friday. Job growth totaled upwardly revised 785,000 in March.
The unemployment rate, meanwhile, dropped by 0.3 percentage point to 5.8 percent, which was down considerably from its recent high in April 2020, but remained well above the pre-pandemic level of 3.5 percent.
In a speech from Delaware, U.S. President Joe Biden called the May jobs report "great news," touting that his administration has led a historic economic rebound from the COVID-19 pandemic.
Peterson Institute for International Economics (PIIE) senior fellow and Harvard professor Jason Furman and Harvard Kennedy School research associate Wilson Powell noted in an article that the May figure is similar to the average of 533,000 jobs over the previous three months and "much faster" than the pace in the three months before that.
The "realistic" unemployment rate, which adjusts for the unusually large reduction in labor force participation, was 7.3 percent in May, 1.5 percentage points higher than the official figure, according to Furman and Powell.
Noting that hiring fell short of expectations, Sarah House and Shannon Seery, economists at Wells Fargo Securities, said in an analysis that the participation rate fell in a sign that "labor availability continues to tighten."
According to the official data, labor force participation rate edged down by 0.1 percentage point to 61.6 percent in May, which is 1.7 percentage points lower than pre-pandemic level. Labor force participation has remained within the range of 61.4 percent to 61.7 percent since June 2020, the report noted.
"May's jobs report confirmed that the biggest challenge to the labor market's recovery right now is labor itself," House and Seery said.
Businesses are rapidly raising wages in an effort to "lure workers back to the jobsite" as a result, they said, noting that average hourly earnings rose 0.5 percent in May, with compositional effects unable to explain away the strength.
The largest factor holding back labor supply may simply be that "it takes time" for workers to reconnect to jobs as "job flows in the economy remain very high," Furman and Powell argued.
In addition, COVID-19 was still "relatively prevalent" in May as much of the population remained unvaccinated and many states were just beginning to adjust their public health guidance, Furman and Powell continued.
"These factors interact with unemployment insurance which can allow workers to take longer to rethink their careers, try to find jobs in new industries and negotiate for higher wages - but can also slow employment growth and prolong long-term unemployment," they said.
In the past few weeks, over 20 states have announced plans to end the 300-dollar weekly federal unemployment benefits ahead of expiration date of Sept. 6, citing labor shortage. Some states are ending the federal aid as early as June 12.
These states, all led by Republican governors, argued that enhanced unemployment benefits are encouraging laid-off workers to stay home instead of looking for jobs, leading to hiring challenges for businesses.
U.S. Treasury Secretary Janet Yellen, however, recently refuted these arguments, saying that caregiving responsibilities and concerns about the pandemic are still important reasons why some people are unable to return to work.
"Our view is that it's going to take time for workers to regain confidence in the safety of the workplace; reestablish childcare, school, and commuting arrangements; and finish getting vaccinated," White House Press Secretary Jen Psaki said at a press briefing Wednesday.
In May, job gains were notable in leisure and hospitality, public and private education, as well as health care and social assistance, according to the monthly employment report.
Employment in leisure and hospitality increased by 292,000, as pandemic-related restrictions continued to ease in some parts of the country, the report showed, while noting that the figure is still down by 2.5 million, or 15 percent, since February 2020.
Employment in local government education, state government education and private education increased by 53,000, 50,000 and 41,000, respectively, but is still lower than pre-pandemic levels.
Construction employment edged down by 20,000 in May, reflecting a job loss of 17,000 in nonresidential specialty trade contractors, the report showed. Employment in retail trade also declined by 6,000, which is 411,000 below its pre-pandemic level.
Despite the improvement in the pandemic-ravaged labor market, some 9.3 million people remained unemployed in May, well above the pre-pandemic level of 5.7 million, according to the report.
"The labor market is healing but not as rapidly as the overall economy. Consumers are spending and businesses are reopening faster than many employees are able or willing to return to work," Diane Swonk, chief economist at Grant Thornton, a major accounting firm, said in a blog.
"A return of day care centers, summer camps and schools in August will all help alleviate those hurdles," Swonk added. Enditem
