May’s job gains are a big step up from April, but the country still has a long way to go in returning to pre-pandemic levels.
Job Growth Accelerates But Still Below Predictions
The U.S. economy added 559,000 nonfarm jobs in May, according to the Bureau of Labor Statistics.
That figure is a stark contrast to April’s massively disappointing numbers, which initially reported 266,000 added jobs despite analysts’ predictions of near 1 million. The bureau later revised that number to 278,000.
Like April, May’s official numbers once again failed to meet economists’ estimates, which were predicted to land between 650,000 and 674,000 jobs added.
Despite being mildly underwhelming, the recovery of the U.S. labor market appears to be back on track, and this marks the fifth consecutive month of increasing job gains.
With May’s added jobs, the country’s unemployment rate also fell from 6.1% to 5.8%. That is the lowest it’s been since March 2020, though it’s still about 5% higher (approx. 7.6 million workers) than pre-pandemic levels.
“Adding over a half-million jobs in one month is a solid pace of growth, but we will need to keep up this tempo for quite some time to get back to a semblance of the pre-pandemic labor market,” Nick Bunker, the economic-research director at Indeed, told Insider.
Meanwhile, Kathy Jones, head of fixed income at Charles Schwab, told CNBC, “Economists have been a little overly optimistic about the pace of which we’re moving here. It takes a while for people to get jobs.”
The leisure and hospitality sector easily saw the highest rate of job growth in May, largely thanks to the continued easing of COVID-19 restrictions across the country. In fact, it accounted for 292,000 of May’s added jobs. Within that sector, restaurants and bars dominated by bringing back 186,000 jobs. Amusement, gambling, recreation, and accommodation also saw significant job growth. Still, overall, the sector is down 15% (approx. 2.5 million jobs) compared to pre-pandemic levels.
As in-person education resumed for many parts of the country, roughly 144,000 jobs were added between a mix of local, state, and private education. Meanwhile, the healthcare industry added 46,000 jobs, and manufacturing/transportation, as well as warehousing, each accounted for 23,000 added jobs.
Construction was among the most heavily hit industries in May, losing 20,000 jobs.
Unemployment Claims Fall Below 400,000
The jobs data comes on the heels of Thursday’s weekly unemployment claims report, which announced that for the first time since the early days of the pandemic, initial jobless claims have fallen below 400,000.
Prior to adjustment, the Labor Department reported 385,000 claims for the week ending on May 29. That’s below the Dow Jones’ estimate of 393,000.
It also marked the fifth consecutive week of declines.
Despite that, continuing claims rose from 3.6 million to 3.77 million.
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Biden and Other G7 Leaders To Endorse a Global Minimum Corporate Tax of 15%
The leaders are hoping to prevent companies from moving their headquarters to countries with lower tax rates, but their plan will likely face substantial hurdles both internationally and from the U.S. Congress.
Global Tax Minimum
President Joe Biden and other G7 leaders announced on Friday that they are endorsing a global minimum corporate tax rate of 15%.
Their plan seeks to effectively end company strategies of moving headquarters to countries with cheaper tax rates, even if most of their business is located elsewhere. Coupled with the tax minimum, the leaders have also announced a tax plan that links companies to where they do business rather than where they are headquartered.
Should it become widely adopted, the plan could prove to be a significant threat to the so-called tax-cutting “arms race,” where countries push for lower and lower corporate tax rates to attract businesses; however, the plan will undoubtedly face challenges of its own. For example, Ireland — a country with a 12.5% corporate tax rate — has said such a policy would be detrimental to its economic success.
The Wall Street Journal has also reported that China is unlikely to support the plan, though it noted that such support isn’t completely off the table. While China already has a higher corporate tax rate of 25%, its special administrative region of Macau has a noticeably lower rate of 12%.
Even England itself, which is backing the global tax rate, is looking to exclude London’s financial services companies from the overhaul.
As the White House noted in a press release, “This U.S. priority is a critical step towards ending the decades-long race to the bottom that pushes nations to compete over who can offer the lowest tax rate to large corporations at the expense of protecting workers, investing in infrastructure, and growing the middle class.”
The G7, or Group of Seven, is an informal alliance between many of the world’s top economies, composed of the United States, Japan, Germany, France, the United Kingdom, Italy, and Canada. Leaders for each met in person Friday to discuss not only the global tax rate but also issues such as coronavirus aid, climate change, and cybersecurity.
Following this weekend’s summit, the G7 hopes to push its global tax minimum before the G20, which is composed of 19 countries and the European Union.
Congress Would Need to Sign Off
While only an endorsement, any official implementation of a global tax rate in the U.S. would require congressional approval.
That could prove difficult considering people like Sen. Pat Toomey (R-Pa.) have called the plan “crazy.”
“Certainly the whole fact that they had to try to persuade all these other countries to make sure they raise their taxes is a confession of the damage we’re doing to our own country,” Toomey added. “They certainly wouldn’t have the votes to approve a treaty of this kind that they’re contemplating.”
Biden’s plan to raise domestic corporate tax rates from 21% to 28% has also faced major opposition from Republican lawmakers. This week, the president indicated that he would be willing to decouple the tax hike from his infrastructure plan, but talks with Republicans have since fallen through.
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Man Sparks Debate After Boasting About His 14-Year-Old Working at Burger King Every Day
Many Twitter users said kids should enjoy childhood since they have their entire adult lives to work, while others argued that working young teaches beneficial life skills.
Viral Facebook Post
A father’s Facebook post celebrating his 14-year-old son for working every day at Burger King has triggered a heated debate regarding children in the workforce.
The post in question, written by a man named Chris Crawford, featured two images of his son in his uniform.
“HUGE shout out to this kid of mine, 14 years old and has a [[art time] job at Burger King,” he wrote.
“Not only does he work every day he can, including weekends when most kids are out enjoying their summer, he goes in early and stays late almost every time he works, he loves every minute of it,” the father continued.
“Making his own money, saving for a car, being responsible in his decisions, becoming a respectable young man!!! I couldn’t be more proud of him! Some of y’all lazy, grown ass people out there should take notes !!! #prouddad,” he concluded.
That post was shared on Twitter by a user who wrote, “god this is depressing.”
Users Speak Out Against Working at a Young Age
Many were quick to agree with that Twitter user, accusing the father and others like him of romanticizing exploitation and advocating for child labor.
Another user wrote, “Capitalism has literally brainwashed people to think this is a heartwarming story.”
Meanwhile, others noted that there is more to life than work and said kids should be enjoying their childhood because they have the rest of their adult lives to have jobs.
my kid has no friends, social life or hobbies, take notes grown adults!— hot ghoul summer (@beccamarshmallo) June 9, 2021
Many even shared regrets they have about working from a young age because of all the experiences they missed out on. One person said, “All I got from it was an unhealthy relationship with work that I carry to this day.“
I was encouraged both by management and by my parents to overwork myself. I think it was seen as “learning work ethic”. All I got from it was an unhealthy relationship with work that I carry to this day. This post makes my stomach ache. That kid should enjoy youth, not work.— August (@AugustBreak118) June 10, 2021
Others Show Support for Working as a Teen
However, not everyone was outraged by the young teen working.
In fact, others applauded the child for having a “go-getter attitude,” arguing that he is setting himself up for bigger and better opportunities in the future by gaining good experience at a young age.
Some even said that working young helps teach money management, people skills, self-sufficiency, and more beneficial life tools, though many have pushed back that there are other ways to teach such skills.
I started working for my own money at age 12, and I agree that making your own money teaches you money management, standing up for yourself, motivation, people skills. My mom didn’t buy me anything because we were so poor. If my mom could have bought me clothes she would have.— Bastthekitty (@Stephen27241447) June 10, 2021
Same!! I was forced to start working at 16 and i was mad about it back then, but tbh it gave a lot of time to build up my resume, and a sense of how money works and made me more self sufficient at a younger age! And by the age of 23 was able to get a better job bc of prior— loofus (@funf3tti) June 10, 2021
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Weekly Unemployment Hit Another Pandemic Low, but Consumer Price Inflation Saw Its Biggest Jump Since 2008
The Federal Reserve believes the Consumer Price Index hike is only temporary and related to unique factors brought about by the pandemic.
CPI on the Rise
While the past week marked the sixth straight round of pandemic-era lows for the number of initial unemployment claims, additional data shows that prices on the consumer side are climbing at their fastest rate since the summer of 2008.
Year over year, the Consumer Price Index rose 5% in May. The core CPI, which excludes volatile food and energy costs, also rose at its fastest rate since 1992, jumping 3.8%.
Just looking at the numbers and nothing else, that could be pretty concerning given the fact that last month beat out 13 years worth of data tracking back to just before the U.S. was hit by the 2008 financial crisis.
But the Federal Reserve doesn’t seem all that concerned. In fact, it believes the CPI jump is based on mainly temporary factors related to the pandemic. That includes supply bottlenecks and other shortages brought by the reopening of the economy.
Economists have also noted that year over year values are currently stilted since so much of the economy was shut down this time last year. By comparison, that yields a large and alarming figure if looked at without context.
Because of that, the Fed said prices will likely come down as the year continues.
Still, that explanation hasn’t completely shaken fears that a high CPI could potentially cause long-term damage if it fails to subside.
“The stakes are high on both Wall Street and Main Street,” The New York Times reporter Jeanna Smialek said in a Thursday article. “Inflation can erode purchasing power if wages do not keep up. A short-lived burst would be unlikely to cause lasting damage, but an entrenched one could force the Fed to cut its support for the economy, potentially tanking stocks and risking a fresh recession.”
Sixth Straight Week of Pandemic-Era Low Unemployment Claims
Initial unemployment claims fell to yet another pandemic low, this time dropping to 376,000.
Meanwhile, continuing claims dipped as well, falling from 3.65 million the previous week to 3.5 million this past week.
Despite the U.S. currently experiencing an ongoing labor shortage, multiple weeks of continuing declines indicate that the job market is gradually working its way back down to pre-pandemic levels of around 200,000 claims a week.