The Real Unemployment Rate – May 2021

The Real Unemployment Rate – May 2021

Bottom Line: My real question coming out of last Friday’s jobs report is if it was really as weak as it seemed. While the ADP Report showed private sector job growth coming in weaker than had been expected – it was still well ahead of the government’s numbers. Given the massive government revision’s we’ve been known to see, this report has the making of one which will include positive revisions in future months. But even now there’s more than meets the eye with these numbers. 

First, the headline numbers from the jobs report:

  • Unemployment rate 6.1% (up .1%)
  • +266,000 jobs
  • Negative revisions from previous months totaling 78,000jobs

Not only was the gain weaker than expected, net of revisions, fewer than 200k jobs were added. No wonder the unemployment rate went higher. But the reported base rate and the real unemployment rate are two separate things... The real unemployment rate once underemployed, long-term unemployed and marginally attached people are accounted for:

  • Actual: 10.4% (down .3%)

There are currently 11.3 million people who are long-term unemployed, underemployed or marginally attached to the workforce which make up the difference between the base rate and the real rate. The real unemployment rate dropped while the base rate went higher. This is where the real news from this report showed up. 600,000 people in one of those three categories improved their employment situation during the month. That’s the real jobs story of April. 

As for Demographics...

  • No big shifts in any demographic

As for Money...

  • The average hourly wage rose by 21 cents per hour during the month to$30.17
  • The average full-time income is currently $54,909 an increase of $536 over the prior month

This was also good news. Hourly wages are the second highest on record and annual earnings are now pacing a record high. On balance the news under the hood of the jobs report was far better than the headline numbers and should see positive revisions going forward. 

Photo Credit: Getty Images

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