After missing expectations by the widest margin ever recorded in April, monthly job growth only narrowly missed expectations in May. Nonfarm payrolls increased by 559,000, compared with predictions of 671,000 and 650,000 from surveys of economists. Meanwhile, job gains in March and April were revised upward by a combined 27,000. Much of the growth in May came from the leisure and hospitality sectors, which continue emerging from COVID-19 restrictions.

Headline unemployment fell from 6.1 percent to 5.8 percent—and for the second straight month, the number of people unemployed for 27 weeks or longer declined, as did the long-term share of total unemployment.

As for wages, real average hourly earnings increased by 2 percent on a year-over-year basis, which represented an acceleration from April. The more important news, according to former Obama White House chief economist Jason Furman, concerns nominal wages (i.e., wages not adjusted for inflation). “Nominal wage growth is on fire (although real wage growth is less clear because we don’t have inflation for March),” Furman tweeted. “Over the last two months it has risen at the fastest pace since the 1980s.”

Looking ahead to the fall, Kathy Jones of the Schwab Center for Financial Research points out that school re-openings will help boost state and local education employment, which is still down by about 800,000 jobs since February 2020.

The story gets less encouraging when we look at labor-force participation, which fell slightly in May after rising in April. Baby-boomer retirements continue exerting downward pressure on the overall rate. But the participation rate among prime-age men was lower in May than it was in August and October 2020—even as wage-growth accelerated and employers complained of labor shortages.

Republicans have argued that the federal supplemental unemployment benefits extended by the American Rescue Plan are discouraging people from seeking work. Until last week, President Biden had disagreed. On Friday, however, Biden said “it makes sense” that the program is expiring in September, and White House Press Secretary Jen Psaki said GOP governors “have every right” to withdraw even sooner. (Most Republican governors have announced that they will end the program in their state in either June or July.) “No one from the administration has ever proposed making these [benefits] permanent or doing it over the long term,” Psaki added.

Economic uncertainties abound. Will the recent jump in consumer-price inflation be “transitory,” as the Federal Reserve has predicted, or will it prove more durable? Will global supply-chain disruptions continue into 2022? How long will the current housing boom last?

Given all these uncertainties, along with the persistent weakness in prime-age labor-force participation, it seems like the wrong moment to enact America’s largest tax increase since the 1960s.