Economists have been closely watching monthly US job reports for signs of cracks in the labor market that could offer clues as to when a recession could start. But their predictions have been tested month after month with stronger-than-expected gains.
Last month's jobs report was no exception.
Employers added a whopping 339,000 new jobs in May, crushing the 190,000 job gains economists predicted.
Employers have been consistently hiring more workers each month since January 2021. This came as more parts of the economy gradually reopened after months of lockdowns.
In 2021 employers added an average of 606,000 jobs a month. Those gains leveled off a bit in 2022 with employers adding an average of 399,000 jobs each month. That figure has continued to decline this year, but it's still impressively high at 314,000 average monthly gains.
In total, 3.7 million more people were working last month than in February 2020, before the pandemic caused major disruptions in the US economy.
While many industries like transportation and warehousing have recovered all their workers — and more — some industries are still struggling to recover all the workers they lost due to the pandemic.
Industries that are short of workers
There are four major sectors of the economy employing fewer workers now compared to before the pandemic.
Leisure and hospitality has the biggest shortage of workers, down 349,000 people, or 2% of the total pre-pandemic workforce.
At the height of the pandemic, leisure and hospitality workers suffered the most layoffs across all industries as venues shuttered during lockdowns. But even when restaurants, bars and entertainment spaces were allowed to reopen and people slowly started traveling again, workers didn't jump at the opportunity to get their old jobs back.
Instead, people found jobs in different industries that paid more and reduced their exposure to people, said Jim McCoy, senior vice president of talent solutions for ManpowerGroup, a leading staffing firm.
"We saw a big conversion of people working in restaurants to going to work from their homes," McCoy said. Many of these workers found jobs working remotely for call centers and have stuck with the jobs ever since, he added.
Government jobs are suffering the second-biggest shortage of workers.
The sector covers a wide range of jobs, including sanitation and postal service workers. But within that industry, the bulk of the worker shortage is coming from public school teachers.
There were 118,000 fewer public school teachers across the country last month compared to February 2020, according to Bureau of Labor Statistics data.
Like leisure and hospitality workers, many teachers quit their jobs over fears that it would put them at a higher risk of contracting Covid.
"We're not seeing people coming back into the workforce fast enough as they are in other sectors to recover some of those jobs," McCoy told CNN. Despite the shortage, public education jobs were much slower to raise wages than other industries, likely due to state and local budget constraints.
But that's started to change recently.
"We're seeing evidence in the last year and a half that school districts and colleges have made some headway in terms of wage gains to keep up with the cost of living for their employees," McCoy said.
