The May 2021 Jobs Report: Inequities and Employment Barriers Persist Amidst Lower Unemployment    

Frank Stricker

By FRANK STRICKER

The good news: the unemployment rate fell from 6.1 percent to 5.8 percent and the number of added payroll jobs doubled from 266,000 in April to 559,000 in May. But the latter was, again, less than the average prediction. Also, at this rate job totals won’t return to pre-pandemic normal until late next year. And pre-pandemic normal is not real full employment.

As the National Jobs for All Network’s Full Count shows, there is a lot of hidden unemployment behind the official unemployment rate. Last month,  6.6 million people wanted jobs but weren’t searching and so were not counted as unemployed. More decent job offers would draw such people into the work force.

In May, the major ethnic groups showed improvement, but some old inequalities widened. As the pandemic recession began in April 2020, white and black unemployment rates were fairly close at 14.1 percent  and 16.7 percent.  Last month the white rate was 5.1 percent while the black rate was 9.1 percent–almost twice as high. The unemployment rate for Hispanics, which was the highest among major ethnic groups in April 2020 at 18.9 percent, fell to 7.3 percent–the biggest turnaround among ethnic groups. Unemployment for Asian Americans at 5.5 percent was just a bit higher than for whites. The unemployment rate for disabled Americans was very high at 10.2 percent–twice the rate for the non-disabled. But the teen unemployment rate was the lowest it has been in ten years.

A Labor Shortage during a Depression?

The pandemic’s most destructive effects on employment were in the leisure and hospitality sector, which includes bars, restaurants of all kinds, and hotels. In May 2020, unemployment for this sector’s workers reached an incredible 36 percent. Last month, it had fallen to 10.1percent–quite a decline but still twice the national unemployment rate.

Employers in the leisure and hospitality sector are leading the charge to cut unemployment benefits which, they say, are the reason they cannot get all the workers they want (unspoken: at the wage they want to offer). Some claim to be offering higher pay, but let’s get real: average weekly hours at 25 and average hourly pay of $15.87 are the lowest of any major sector in the economy.

Wages seem to be rising as employers try to attract workers, but some of the apparent increase in wages, according to researchers at the Economic Policy Institute, may be a mirage, a reflection of the reopening of full-service restaurants where workers are tipped and paid better than other kinds of eating establishments. More people at jobs that pay better is a positive, but the evidence of substantial wage-rate increases for specific jobs at different kinds of establishments may not be there.

Meanwhile, there are unusual currents of reflection and resistance among workers. Not what one would expect when millions of people should be desperate for work. Of course, the familiar overarching factors are operative: There aren’t enough jobs, and workers are dealing with child-care issues, fears about getting sick at work, and lousy compensation. But there may be more people than we’d expect in a major job depression, quitting lousy jobs or thinking about quitting. “Rage quitting” is a new term for some of this. A lot of people are fed up with low pay, no benefits, and harsh supervision. A Pew Foundation survey and other sources show that more people than ever are thinking about changing careers. Bonus unemployment benefits are helping here, but most red states are cutting them.

New York Times writer Neil Irwin thinks these phenomena reflect an historic shift that favors workers, one rooted in such pre-pandemic structural conditions as slower growth in the 20-to-64-year-old population. In short, fewer people, stronger bargaining positions. These deep changes are forcing employers to be more flexible in hiring requirements, to raise pay, and to offer more benefits, such as training, free meals, and college tuition subsidies.

But will such things become widespread and institutionalized? Will they endure once the current “shortage” passes?  And if it was harder to get workers even before the pandemic, why weren’t wages rising faster? Finally, how could Uber and Lyft and Doordash continue to maintain such a reactionary, Robber-Baron, 19th century labor market if workers were gaining bargaining power? Normally, these companies make no contributions to government programs–Social Security, unemployment insurance, and so on. Net pay can be very low. People take these jobs, in part because, yes, the hours were flexible, but also because they have no other jobs or their other jobs don’t pay enough. Such conditions don’t signal a labor market that was tilting in favor of workers.

Frank Stricker is a board member of the National Jobs for All Network, emeritus history professor, California State University, Dominguez Hills, and the author of “American Unemployment: Past, Present, and Future” (University of Illinois Press, 2020).

 

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