Employers added 559,000 jobs in May, the Labor Department said Friday, missing the addition of 650,000 jobs that analysts surveyed by Refinitiv were expecting. April’s reading was revised higher by 12,000 to 278,000.
The unemployment rate, meanwhile, declined 0.3 percentage points to 5.8%, its lowest since the pandemic caused businesses to shut their doors in March 2020.
Despite the gains, the U.S. economy has 7.6 million, or 5%, fewer workers from its February 2020 pre-pandemic level.
“Only a few months ago we had expected to see several months’ worth of gains north of one million as the economy reopened, but labor supply is bouncing back much more slowly than demand,” said Paul Ashworth, chief U.S. economist at research firm Capital Economics.
The labor force participation rate was little changed at 61.6% and has remained between 61.4% and 61.7% since last June. The reading was 1.7 percentage points below where it was in February 2020. Average hourly earnings rose 15 cents to $30.33 while the average workweek held at 34.9 hours for the third month in a row.
U.S. companies have had a difficult time finding workers as a supplemental unemployment benefit of an extra $300 per week has encouraged many to stay home. At least 25 states have announced plans to end the benefits earlier than their September expiration.
Economists say the labor market’s recovery could continue to run below its potential until the benefits are phased out.
“With unemployment benefits set to fade in the fall, we may be waiting until the end of summer before we see clear evidence of a fundamentally healing labor market,” said Seema Shah, chief strategist at Principal Global Investors.
Wisconsin should get tougher on unemployed people who apply for jobs to meet work search requirements but then skip out on the interview, Assembly Speaker Robin Vos said Wednesday.
Vos, the owner of a food packaging business, said during the pandemic that he was fearful he would go bankrupt. Now Vos said he’s also battling worker shortage problems and is offering gift cards to employees who show up to work on time five days a week.
Vos, in a back and forth with a business owner who described job applicants skipping out on interviews, questioned whether Wisconsin should do more to combat that. “It seems like in Wisconsin we don’t do a very good job to report a no-show for an interview and doing something about it,” Vos said.
Republican legislative leaders, along with the state chamber of commerce, trade groups and local economic development groups, are advocating for the state Legislature to repeal a $300 unemployment supplement and other enhancement programs enacted during the coronavirus pandemic.
Wisconsin Republicans last month reinstated a work search requirement for the unemployed, a move designed to get more people back into the workforce. The Assembly was scheduled to vote next week on a bill ending the $300 payment and other federal enhancement programs.
Governor Tony Evers defended the additional $300 a week in federal unemployment benefits being allocated in response to the COVID-19 pandemic.
His position comes despite business groups calling on him to immediately stop the payments.
Critics argue the additional money is a major factor in the state’s workforce shortage.
“First of all, I’d like to see proof that the people struggling on unemployment, that if they all came back to work suddenly this problem is solved,” Evers said outside the state Capitol. “It’s an issue I’ve seen no data on, none whatsoever.”
Republican lawmakers are moving legislation that would end the additional federal money.
The governor appears likely to veto it. “I’ll take a look at it,” Evers said when asked Tuesday.
The additional $300 a week in federal benefits is set to expire on Labor Day.
Some 84,000 Wisconsin businesses have been invited to apply for a $5,000 grant to be distributed by the Wisconsin Department of Revenue and Wisconsin Economic Development Corp.
Gov. Tony Evers authorized $420 million, through funding received by the American Rescue Plan Act, to be distributed to businesses that apply by 4:30 p.m. on June 7.
The businesses selected to be eligible for the grants had to have an annual gross revenue between $10,000 and $7 million.
Last year WEDC distributed $240 million to roughly 60,000 small businesses through funds received from the CARES Act. Businesses that received funding last year could be eligible again for this new round of funding. Also, businesses that were started in 2020 are also eligible.
WEDC said the state is hoping to start distributing the grants to businesses as early as the first week in June, with the goal of having all the money distributed by the end of June.
Those interested in learning more about the program should visit the Department of Revenue website.
A key inflation indicator rose a faster-than-expected 3.1% in April as price pressures built in the rapidly expanding U.S. economy, the Commerce Department reported Friday.
The core personal consumption expenditures index was forecast to increase 2.9% after rising 1.9% in March. Federal Reserve officials consider the measure to be the best gauge for inflation, though they watch a number of metrics.
The index captures price movements across a variety of goods and services and is generally considered a wider-ranging measure for inflation as it captures changes in consumer behavior and has a broader scope than the Labor Department’s consumer price index. The CPI accelerated 4.2% in April.
That increase in inflation came with a sharp deceleration in personal income, which declined 13.1%. But that actually was less than the 14% estimate. Personal income had surged 20.9% in March following the latest round of government stimulus checks.
New applications for regular unemployment benefits fell in late May for the fourth week in a row as the U.S. economic recovery from the waning coronavirus pandemic induced companies to hire more workers.
Initial jobless claims sank 38,000 to 406,000 in the week ended May 22, the government said Thursday. That’s the fewest number of requests for compensation since the onset of the pandemic nearly 15 months ago.
New requests for compensation are down sharply from about 900,000 in early January. The number of new applications had been running in the low 200,000s before the viral outbreak last year, however.
Another 93,546 applications for jobless benefits were filed last week through a temporary federal relief program. These claims had peaked last year at well over 1 million a week but have now dwindled to a pandemic low.
The number of people already collecting state jobless benefits, meanwhile, fell by 96,000 to a seasonally adjusted 3.64 million in the week ended May 15. These are known as continuing claims.
Some 5.2 million people who have exhausted state compensation were also getting extra federal benefits. The federal program ends in September.
Altogether, the number of people reportedly receiving benefits from eight separate state and federal programs totaled 15.8 million as of May 8. These claims had topped 30 million early in the crisis.
Fewer than 2 million people were getting benefits before the pandemic erupted.
The Republican-controlled state Legislature took no action Tuesday during a special session called by Gov. Tony Evers to expand Medicaid in Wisconsin and accept $1 billion in additional federal funds.
Governor Evers called the special session last week and proposed a bill that would add Wisconsin to a list of 38 other states and Washington, D.C., that have expanded Medicaid since 2014, when it was first offered as part of the Affordable Care Act. The expansion would extend Medicaid health benefits to 91,000 additional people in Wisconsin by raising the income cap from 100 percent of the federal poverty level, which is $26,500 for a family of four, to 138 percent, or $36,570.
“I think we should be doing everything we can to make sure our economy bounces back from this pandemic, and this special session was about finding common ground and getting bipartisan support for our efforts,” Evers said in a prepared statement. “Clearly, it’s disappointing Republicans don’t seem to take that responsibility seriously, and they’ll have to explain to Wisconsinites why they made the decision they did today.”
Wisconsin Republicans have for years opposed the expansion, calling it an unnecessary increase in welfare and arguing it could saddle Wisconsin with additional costs in the future, if federal support were to decrease.
“Wisconsin provides quality, affordable coverage for all those who need it and expanding the program would simply lead to more people on a taxpayer funded government program and more expensive private plans for others,” Assembly Speaker Robin Vos, R-Rochester, and Senate Majority Leader Devin LeMahieu, R-Oostburg, said in a letter to the governor Tuesday. “Expanding Medicaid as you have proposed is unneeded and even reckless in a state that has no coverage gap and has an effective reinsurance program.”
Short-term health plans, which are typically cheaper than regular insurance because they don’t have to meet many requirements of the Affordable Care Act, could last up to three years in Wisconsin instead of 18 months under a bill to be debated Wednesday.
The measure would align the state with federal regulations approved in 2018 by former President Donald Trump’s administration and provide more flexibility to people needing transitional health coverage, said sponsor Sen. Dale Kooyenga, R-Brookfield.
“There are individuals who find themselves between jobs or starting a business,” Kooyenga said. “For many of them, it’s Cadillac insurance versus no insurance. This offers a good compromise between those extremes.”
Critics say short-term plans can leave people unexpectedly facing large medical bills if they don’t realize the plans don’t have to cover “essential benefits” such as maternity care, mental health and prescription drugs. The plans also aren’t required to cover pre-existing conditions.
Short-term health plans can initially last up to a year, compared to three months during former President Barack Obama’s administration. Under the Trump rule, they can be extended for another 24 months, for a total of three years, if the insurer and consumer agree. In Wisconsin, the total period allowed is 18 months.
About a dozen companies sell short-term health plans in the state, said Sarah Smith, a spokesperson for the Office of the Commissioner of Insurance.
Smith said no data was available on how many residents are enrolled in the plans, but a U.S. House Committee on Energy and Commerce’s Subcommittee on Health report last year said Wisconsin was in the top 10 states in enrollment with about 100,000 people covered.
Governor Tony Evers revived his push to expand Medicaid on Wednesday, this time tying it to a plan that would spend $1 billion in federal incentives on projects throughout Wisconsin.
The proposal represented an attempt by the Democratic governor to recast the well-worn debate as about more than just expanding health coverage, framing it instead as a chance to capture a rare federal incentive payment to spend on dozens of projects, some of them in lawmakers’ backyards.
“We’re going to be utilizing it for projects all across the state,” Evers said at a Wednesday press conference in Middleton. “If the Republicans decide not to do this, they’ll be turning away projects in their own districts.”
But just hours after Evers introduced his plan, several of the Legislature’s top Republicans issued a written statement saying they opposed it.
“Our unique-to-Wisconsin solution is working, and we will not shift tens of thousands of people off their private insurance to a government-run system,” said Assembly Speaker Robin Vos, R-Rochester, and Senate Majority Leader Devin LeMahieu, R-Oostburg.
Wisconsin is one of a dozen states that have decided not to expand Medicaid since the passage of the Affordable Care Act.
Wisconsin offers Medicaid, or BadgerCare, to people who earn up to 100 percent of the federal poverty level. Evers’ proposed budget would have expanded that to 138 percent, which would have covered an estimated 91,000 additional residents. BadgerCare currently covers about 1 million people in Wisconsin.
Republicans on the Legislature’s budget committee rejected the governor’s plan, just as they did two years ago after Evers proposed expanding Medicaid in his 2019 budget.