The current U.S. unemployment rate is 5.8% in May 2021, the Bureau of Labor Statistics (BLS) said in its monthly report, released June 4, 2021. This unemployment rate is 0.3 percentage points lower than April.
Unemployment is one of the most critical economic issues facing the country as it balances re-opening with safety a year into the pandemic. In April 2020, after governments shut down the economy, the unemployment rate reached 14.8%, the highest since the Great Depression. While May 2021's unemployment rate is significantly lower, it's still far from pre-pandemic levels.
Economists warned that the economy needed a widely distributed vaccine before unemployment returns to normal levels. Three vaccines have been approved for emergency use authorization from the Food and Drug Administration (FDA), but distribution started slowly. The pace has picked up, however.
"The economy is finding new ways to do business, and is hiring back workers on furlough because of COVID-19 more quickly than expected," said Robert Frick, corporate economist at Navy Federal Credit Union, in an email interview. "On the other hand, the pace of new hires is slowing, and more workers are moving into the ranks of the long-term unemployed."
The Federal Reserve estimated that the economy will return to a healthier 4.5% unemployment rate in 2021, 3.9% in 2022, and 3.5% in 2023.
The sectors with the biggest job gains included leisure and hospitality, private and public education, and health care.
Overall, the number of unemployed is at 9.3 million. The ongoing job losses show the tremendous impact of the COVID-19 pandemic on the employment situation.
March Unemployment Figures in Detail
The total number of unemployed is 9.3 million, which is lower than in April. The number of long-term unemployed (those who have been searching for jobs for 27 weeks or more) fell to 3.75 million. A smaller number, 2.0 million, were laid off in the last 5 weeks. This shows that the largest segment of the unemployed lost their jobs earlier in the pandemic.
The real unemployment rate was 10.2% in May, which is lower than in April. This alternate measure of unemployment, known as U-6, gives a broader definition of unemployment. It includes people who would like a job but haven't looked for one in the past month. It also includes those who are underemployed and marginally attached.
The real unemployment rate contains 600,000 discouraged workers, up from 565,000 in April and 523,000 in March. Discouraged workers are people who have given up looking for work but would take a job if offered. They are not counted in the unemployment rate because they haven't looked for a job in the past four weeks.
The labor force participation rate was 61.6%, which is 0.1 percentage point lower than in April. The labor force doesn't include those who haven't looked for a job in the past month. Some would like a job, but others dropped out of the labor force for different reasons. They may have retired, gone back to school, or had a baby.
Difference Between the Unemployment and Jobs Reports
The unemployment rate and figures from the jobs report don't always tell the same story because they are taken from two different surveys.
The unemployment rate is taken from the household survey of individuals. It describes who is employed and who isn't based on their responses.
The number of jobs added is taken from the establishment report, more commonly called the nonfarm payroll report. This survey of businesses describes how many jobs were created or lost by industry.
Since these reports are taken from completely different sources, the number of unemployed doesn't match up to the number of jobs lost. Those discrepancies are expected. These estimates are revised each month as more data comes in.
How to Use the Unemployment Rate
Keep in mind that the unemployment rate is a lagging indicator. It tells you what has already happened. Employers only lay off workers after business has already slowed.
The unemployment rate hasn't lagged as much as usual during the pandemic because it all happened so suddenly.
When a recession is over, companies resist hiring new workers until they are sure the economy will stay strong. The economy could improve for months, and the recession could be over before the unemployment rate drops. Although it's not suitable for predicting trends, it's useful for confirming them.
Recent Unemployment History
To put the May report into perspective, check the unemployment rates since 1929.
In 1933, the unemployment rate reached a record of 24.8%. Unemployment remained above 14% for nine years, between 1931 and 1940. April 2020's unemployment rate reached that level in just a month.
In November 1982, unemployment rose to 10.8%. During the 2008 recession, unemployment peaked at 10% in October 2009. These were devastating recessions. High unemployment levels lasted for years. That's not expected to happen with the 2020 recession.
- The unemployment rate is 5.8%, which is 0.3 percentage points lower than in April.
- This is significantly higher than before the pandemic.
- Some of the biggest gains came in leisure and hospitality, private and public education, and health care.