New Job Numbers Show a Positive Trend

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The Department of Labor’s (DOL) new jobs report is the latest proof that rolling back the restrictions imposed by the COVID-19 outbreak remains the surest way to restore resilience in the economy. The jobs gains over the last month came entirely from that. In fact, the gains from loosening the restrictions appear to be making up for weakness in other areas.

The nation added 559,000 jobs in May, bringing the unemployment rate to 5.8 percent. The DOL said that 7.9 million people, down from 1.5 million in the previous month, reported that they were unable to work because their employer had closed or lost business due to the pandemic. That shift dwarfs May’s job gains, which suggests that the nation would be in significant trouble if not for the easing of restrictions.

Wages are up as well, with hourly earnings for nonfarm payrolls rising by 15 cents to $30.33 in May, following an increase of 21 cents in April. This likely reflects the shift away from the make-work jobs that, while helpful during the crisis, weren’t as lucrative as more traditional work.

The sector with the strongest growth was leisure and hospitality, which gained 292,000 jobs in a month. That includes businesses like restaurants, hotels, bars, movie theaters, concert venues, and casinos. They’re the proverbial canary in the coalmine as far as the outbreak goes. The areas that are the first to be hit when restrictions are imposed and the first to bounce back when they’re eased. There are still 2.5 million fewer people employed in this sector than there were in February 2020, before the crisis hit, so there is still a significant amount of ground to be regained.

Unfortunately, the leisure and hospitality recovery rate is actually slowing. This sector gained 331,000 jobs in April. Notably, the growth in jobs in restaurants and bars was nearly identical in April and May, both at around 186,000. The loss in jobs momentum came from slower hiring by hotels, casinos, and amusements, which was 93,000 in May, down from 127,000 in April. That suggests that larger-scale hospitality businesses are having a harder time readjusting. That is likely due to food and drink establishments are smaller-scale businesses and are therefore able to bounce back quicker

Another area of notable gains was public and private education, which gained 141,000 jobs in May, reflecting according to the DOL, “the continued resumption of in-person learning and other school-related activities.” Growth in this area is crucial because of the spillover effect—the more children who are back in the class, the more adults who can rejoin the workforce because they no longer have to mind their kids at home. People who teleworked in May accounted for 16.6 percent of the workforce, down 18.3 percent in April, which indicates that more workers are able to get out house.

Allowing people to get out of the house, go to work and have a beer with their friends afterward remains the best way for the economy to recover from the outbreak. Getting government out of the way has made that possible.