US labor market improved in May, but recovery takes time and has not been evenly distributed
The US economy added 559,000 jobs in May, bringing down both the official unemployment rate and the realistic rate—which adjusts the official rate to account for misclassification and the unusually large fall in labor force participation. Employment remains 10 million jobs short of its pre-pandemic trend, but other measures show signs of renewed worker confidence and a tight labor market.
The job openings rate in May climbed to 5.9 percent, the highest on record, and the quits rate in March was tied with previous highs. These are positive signs, indicating a tight labor market in which businesses are looking to hire and workers are confident they can find new jobs.
Competition for college-educated workers is tight. The share of workers with at least a bachelor’s degree who are employed is only 2.2 percent below its pre-pandemic level. Non-college educated workers have fared worse, experiencing the largest job losses in the initial collapse of the economy and the slowest recovery.
Recovering from the dislocation of the pandemic will take time. Workers need to reconnect with employers, and some sectors of the economy are still in the process of fully reopening. It is impossible to tell whether all the jobs will come back and how long it will take for imbalances in the economy to correct, but incremental improvements provide cause for optimism.
This PIIE Chart was adapted from Jason Furman and Wilson Powell III’s blog post, “US labor market heated up in May as jobs grew and wages soared.”