%1

Some of the strength in the U.S. payrolls report for May — which included a startling 225,000 manufacturing jobs added — was the result of companies taking part in the Paycheck Protection Program. The problem now is that demand in many industrial sectors, from oil and gas to construction equipment, remains depressed, and that underscores the subdued response key policymakers such as Federal Reserve Chair Jerome Powell have shown over the big upsurge in hiring in May, Reuters reported. “It is a long road. It is going to take some time,” Powell said on Wednesday, cautioning that while encouraging, the surprise 2.5 million jump in jobs in May remains a single data point for now. Data yesterday showed more than 20 million people remain on unemployment benefits even as new claims fell for a 10th straight week. Chad Moutray, chief economist at the National Association of Manufacturers, said that he thinks the worst of the downturn is behind us, but that demand will remain weak as companies fret about the potential for another virus surge and the political uncertainty of an election year. “I don’t see us getting back to pre-recession levels of output until 2022,” he said. He notes that while manufacturers added an impressive number of jobs for a single month in May, the sector is still down 1.1 million jobs from its pre-crisis level in February.

State and federal investigators are scrambling to stop scammers from stealing millions of dollars in unemployment benefits, imposing a raft of new restrictions that have inadvertently deprived some out-of-work Americans from receiving much-needed payments for weeks, the Washington Post reported. The broad, national crackdowns began in May, following reports that organized criminals had set their sights on local labor agencies at a moment when they’re trying to manage the worst economic crisis since the Great Depression. States including Maine, Michigan, Pennsylvania and Washington each have reviewed scores of past applications, while halting some current unemployment payments, hoping to thwart fraudsters before they could sap any more funds. The aggressive actions have helped some of these states identify tens of thousands of suspicious claims filed by alleged criminals, many of whom had relied on personal information stolen from unsuspecting workers to obtain benefits they were not eligible to receive. But these states’ aggressive interventions have also swept up many people who have nothing to do with the scams. Some out-of-work Americans who had properly filed for help — and weathered long delays to obtain checks in the first place — have been baffled and frustrated to find their benefits are now unexpectedly paused. “They said benefits would only be stopped for a few days, but it’s been weeks,” lamented John Tirpak, executive director of the Unemployment Law Project.

The head of the Federal Reserve yesterday offered a grim assessment of how quickly the U.S. economy will recover from its pandemic-induced recession, suggesting that millions of people could remain out of work for an extended period as central bank officials estimated unemployment will be at 9.3 percent by the end of 2020, the New York Times reported. The Fed chair, Jerome H. Powell, said the labor market might have “hit bottom” after recording a 14.7 percent unemployment rate in April, but made clear that it was too soon to know for certain. “This is the biggest economic shock, in the U.S. and the world, really, in living memory,” Powell said after the Fed’s two-day policy meeting, during which it left rates unchanged. “We went from the lowest level of unemployment in 50 years to the highest level in close to 90 years, and we did it in two months.” Powell did not suggest a rapid return to the type of economic growth and low joblessness that defined the 11-year expansion, even as states allow restaurants, offices and salons to reopen. Instead, he said, “there is great uncertainty” about the future given unknowns about the coronavirus and whether people will feel comfortable resuming their previous day-to-day activities absent a vaccine. The Fed will do “whatever we can, and for as long as it takes,” to support the recovery, he said, including buying large quantities of bonds and leaving interest rates near zero for a long time. His central bank colleagues projected no increase to borrowing costs through at least 2022, and Powell said the Fed was “not even thinking about thinking about raising rates.”

Gym chain 24 Hour Fitness Worldwide Inc. laid off an undisclosed number of employees in multiple states via a series of phone calls yesterday, as the company struggles to address the financial impact of closures during the coronavirus pandemic, the Wall Street Journal reported. In the latest example of a remote layoff, 24 Hour Fitness employees received an email on Monday from Tami Majer, chief human resources officer, asking them to join a phone call yesterday for “important company updates.” The message stated that employees would be compensated for one hour of work and asked them not to share the call-in details. According to multiple employees interviewed, those who joined the calls learned they would be laid off, effective immediately. No information about severance or continued benefits was provided on the call, according to the employees. The company later sent an email to laid-off employees, who included fitness instructors, personal trainers and sales staff. As a result of the economic impact from the coronavirus, 24 Hour Fitness “had to take the very difficult action of separating from employment many team members across the organization,” according to the email.

U.S. Labor Secretary Eugene Scalia said that he opposed the extension of $600 a week in unemployment benefits that workers are receiving as a result of the coronavirus pandemic, an option lawmakers are debating as they negotiate the next stimulus bill, the Wall Street Journal reported. Scalia said the enhanced payments, included in a federal stimulus package signed into law at the end of March, will have served their usefulness by the time the current program expires at the end of July. “That recognizes we’ll be in a very different place in July where the opportunity for people to return to work will be far greater,” Scalia said yesterday at a hearing before the Senate Finance Committee. He said that Friday’s jobs report from the Labor Department confirmed millions of Americans were able to return to work as states reopened their economies. “The recovery in the job market has actually happened more quickly than Congress expected in late March,” Scalia said. Extending the extra benefits is one issue Democrats and Republicans have been sparring over as they discuss policy options for the next coronavirus stimulus package. Republicans are concerned that the supplemental benefits, which give many workers more money than they were making before the crisis, will discourage people from returning to work, slowing the economic recovery. Democrats want to extend funding for the larger unemployment payments, arguing that if businesses don’t rebound quickly, the additional money will keep millions of workers afloat.

Senate Democrats are calling on the Trump administration to release more details about an alleged criminal operation designed to defraud state unemployment programs across the country, fearing these systems remain vulnerable to attack amid the worst economic crisis since the Great Depression, the Washington Post reported. The lawmakers’ concerns stem from a memo the U.S. government circulated in May indicating scammers may have harnessed stolen Social Security numbers and other personal information to obtain weekly jobless benefits. The attack appeared to target states including Washington, Massachusetts, Rhode Island and Florida at a time when roughly 40 million Americans were seeking benefits as a result of the coronavirus and in need of financial support. Little else is known about the incident, leading lawmakers including Sen. Patty Murray (Wash.), the top Democrat on the Senate’s leading health committee, and Sen. Ron Wyden (Ore.), who leads the party on the Senate Finance Committee, to demand answers. They also called on the government to dedicate new resources toward helping states defend themselves against similar criminal operations, particularly as they race to get critical jobless aid to Americans who need it most.

The job market unexpectedly reversed its free fall in May as employers brought back millions of workers after pandemic-induced layoffs and the unemployment rate declined, the New York Times reported. Tens of millions remain out of work, and the unemployment rate, which fell to 13.3 percent from 14.7 percent in April, remains higher than in any previous postwar recession. But employers added 2.5 million jobs in May, the Labor Department said Friday, defying economists’ expectations of further losses and offering hope that the rebound from the pandemic-induced economic crisis could be faster than forecast. The report noted that “employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade,” even as jobs in the government continued their decline. Read more. 

Despite reports that the unemployment rate had fallen in May amid the coronavirus pandemic, not all furloughed workers were classified as "unemployed," Newsweek reported. Had they been counted, the rate would have risen by 3 percent. The Bureau of Labor Statistics (BLS) released unemployment data for May on Friday morning. The official unemployment rate for May was 13.3 percent, down 1.4 percent from April's rate of 14.7 percent. However, according to the BLS, furloughed workers should be classified as "unemployed on temporary layoff." A number of these workers were instead mistakenly classified as "employed but not at work." Though some people classified as "unemployed on temporary layoff" were correctly identified, the BLS estimates that about 4.9 million workers out of 5.4 million were erroneously listed as being employed. Had these miscategorized workers been counted correctly, the BLS estimates the true unemployment rate would be 16.4 percent. While this adjusted rate is higher than April's official rate, the BLS says a similar misclassification happened in that month as well, and the adjusted rate for April would be 19.2 percent. Read more. 

The black unemployment rate rose slightly, to 16.8 percent, up 0.1 percent since last month, Vox.com reported. According to the Bureau of Labor Statistics, this means 3.3 million black Americans were unemployed in May, compared to 3.2 million in April, and 1.2 million in January. Asian Americans also did not benefit from the overall falling unemployment — the unemployment rate for that community increased slightly, 0.5 percentage points from April to May, coming in at 15 percent. Instead, the gains were driven largely by white workers, whose unemployment rate fell from 14.9 percent in April to 12.4 percent in May. The unemployment rate for Latinx workers fell slightly to 17.6 percent, down from 18.9 percent in April. Read more.