Unemployment Drops Massively and Unexpectedly as Americans Return to Work
The unemployment rate dropped to 13.3% in May after reaching a record 14.7% in April due to the coronavirus pandemic. Most analysts had predicted unemployment to soar as high as 20%.
Payrolls increased by 2.5 million in May, suggesting Americans are getting back to work and won’t need to file for unemployment benefits.
“These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain it,” noted the Labor Department on Friday.
Sectors to experience the largest employment gains include leisure, hospitality, construction, manufacturing, education and health services, and retail. The only sector to experience major job losses in May was the government, which shed 585,000 jobs.
Overall, the US economy dropped 22.1 million jobs in March and April due to the pandemic. Despite May’s gains, an estimated 21 million workers remain unemployed. Of those unemployed due to job loss, 84% said they expected to return to the same employer.
Complicating matters are the sometimes-violent George Floyd protests, which are preventing some businesses from reopening.
“We had every intention to be operating right now, but now we’re back stuck in the mud,” complains Mike Brand, owner of a sports bar in Washington, DC. “This extra week, maybe two with the riots, it’s taking a huge financial chunk.”
Brand laid off his entire staff in March and re-hired about half of them in preparation for reopening. Many of his former staff refused to come back to work because they said they were making more money from unemployment benefits than they would make working in the restaurant.
A report from the Congressional Budget Office suggests more than 80% of claimants will make more money through the currently-enhanced jobless benefits than they would if they returned to work. Lawmakers are currently debating whether to extend the current benefits, which add $600 a week to existing benefits.
Author’s Note: Trump will get a big boost for the election if the economy comes back as strong as he predicted. This is a massive and unexpected jump and the stock market seems to be following suit.