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Job growth rebounds, but President Biden warns of ‘ups and downs’ as economy recovers

Hiring was robust again by restaurants and bars, which added 186,000 jobs in May.Tony Dejak/Associated Press

WASHINGTON — The labor market got its mojo back last month, doubling the number of new jobs from a disappointing April as the economy continued its solid but bumpy recovery from the pandemic.

The Labor Department reported Friday the nation added 559,000 jobs in May, a bit short of analyst expectations but a strong gain nonetheless that eased fears of a broad hiring slowdown even though many employers say they are still having trouble finding workers.

The unemployment rate dropped to 5.8 percent, a pandemic-era low, and wages continued to rise as businesses compete for workers. Hiring was robust again by restaurants and bars, which added 186,000 jobs in May. And school reopenings led to a jump of 103,000 in public education jobs.


“The important thing to keep in mind is things are going well — very well,” said economist Brian Bethune, a professor of practice at Boston College.

President Biden was quick to tout the new data, which came as a relief to White House officials after lackluster job growth in April led to criticism that pandemic-related enhanced unemployment benefits were stalling the nation’s reopening. The rebound in May means the economy has averaged 540,000 new jobs a month since Biden took office, and he argued that his plans to spend an additional $4 trillion on infrastructure, child care, and education were needed to continue the momentum long term.

“We’re on the right track,” Biden said in Rehoboth Beach, Del. “Our plan is working, and we’re not going to let up now.”

But the president also warned of “ups and downs” in the coming months and said his administration was trying to address supply chain issues, such as a shortage of computer chips, that have led to a price spikes and stalled job growth in some industries.


“As we continue this recovery, we’re going to hit some bumps along the way,” he said. “We can’t reboot the world’s largest economy like flipping on a light switch.”

Some of those bumps were evident in the May jobs report.

The nation has recovered nearly two-thirds of the 22.4 million jobs that were lost when the pandemic shut much of the economy last spring. But, there still were about 7.6 million fewer people working last month than before the pandemic hit and many more collecting some form of unemployment compensation.

“The three-month average of 540,000 job gains is simply not going to cut it with 15 million Americans still on some sort of unemployment benefits,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management in Boston. “At this rate, it will take roughly 28 months, or over two years, to get everyone back to work.”

The unemployment rate was down last month in part because the size of the nation’s labor force stayed essentially flat, shrinking by 53,000 people after growing by 430,000 in April. Although the leisure and hospitality industry added nearly 300,000 jobs last month, Bethune said there should have been many more new jobs given the numbers of businesses that are reopening.

Construction companies shed 20,000 jobs last month. And employment by retailers fell by about 6,000, although that was a marked improvement over the 30,200 drop in April. There is abundant anecdotal evidence that employers in those and other sectors are struggling to hire enough workers.


Jasen Muto’s construction business in Harwich, Mass., held up well during the pandemic as locked-down homeowners focused on renovating their properties. But Muto said he hasn’t been able to staff up to meet that demand, even after raising wages in March by 20 percent or more. He’s paying as much as $25 an hour for unskilled workers and $45 an hour for skilled laborers.

“There are guys out there like me who work because they like it. There are others who just work for a paycheck, and they have no reason to work” if they can make more with unemployment pay, he said. Demand for construction work is so high, Muto said, that people can easily find jobs where they’re paid off the books in cash.

Shawn Rodriquenz, general manager of the Sheraton Boston Needham Hotel, said he had no trouble hiring a new executive team after the management company where he works took over in April. But it’s been nearly impossible to find hourly workers for the front desk, housekeeping, and food and beverage services.

“We’ve just had a complete lack of response to the ads we’ve been placing, and job fairs we’ve been holding,” he said.

Rodriquenz said that despite increasing hourly pay, he can’t attract people who are collecting the $300 a week in extra federal jobless pay. “They’re just not ready to come back. They just want to enjoy their summer.”

Republicans have said those enhanced unemployment payments, part of the $1.9 trillion coronavirus relief package enacted in March with no support from Republicans, were keeping people from returning to work. A recent study by researchers at the Federal Reserve Bank of San Francisco found the $300 payments, which will end in early September, probably had only a small effect on Americans’ decisions about going back to work. Others have pointed to a lack of child care and other factors as more likely explaining the shortage.


Nonetheless, Republican governors in 25 states have said they plan to end the extra payments early, some as soon as this month. On Friday, House Republican leader Kevin McCarthy of California took aim at those payments again.

“As we emerge from the virus, our economy should be booming, but today’s lackluster jobs report shows President Biden’s policies have stalled our recovery,” McCarthy wrote on Twitter. “Washington needs to stop paying people NOT to work. Bidenomics is bad for America.”

Biden said the payments “helped people who lost their jobs through no fault of their own, and who still may be in the process of getting vaccinated.” But he noted they were set to expire in 90 days and “that makes sense.”

The role of expanded jobless benefits in limiting hiring has been exaggerated, said Mark Zandi, chief economist at Moody’s Analytics, an economics research and consulting firm.

“At the top of the list of reasons why there are so many open positions is simply that the economy has reopened very quickly, and it is taking some time for workers that permanently lost their previous job to settle on a new one,” he said. “Other workers are still home taking care of kids and elderly parents. And still other workers are still nervous about the pandemic and require a higher wage to compensate for their concerns.”


Many of those complications should lift by September, when schools will reopen, easing child care concerns, and more Americans will be vaccinated, said Shai Akabas, director of economic policy at the Bipartisan Policy Center, a Washington think tank. In the meantime, economic data could continue to be volatile given the novel circumstances of this recovery and interpreting it will be difficult, he said.

“The economy doesn’t usually reopen from a recession, it gradually recovers,” Akabas said. “It means there’s a lot of different factors moving at one time making it harder to tease out the underlying trends and what’s specifically causing them.”

Jim Puzzanghera can be reached at jim.puzzanghera@globe.com. Follow him @JimPuzzanghera. Larry Edelman can be reached at larry.edelman@globe.com. Follow him @GlobeNewsEd.