The Soften effect can be used to blur the area around your subject to emulate a 'shallow depth of field' in your image.
Here are the steps to soften or blur the background:
Open the Soften effect
0. Before your begin, make sure you have selected (click on) the background image or the layer that you want to soften.
1. Select the Effects tab
2. Open the Soften effect - the entire image will be blurred at this point, we'll fix that.
Blur the background
3. Confirm you have the correct graphic or layer selected (it's possible your image has a single layer. If so, no need to worry)
4. Click the brush icon at the top of the effect to open the Erase & Brush palette
5. Select the Brush icon in the Erase & Brush palette - this puts you in the mode where you add blur rather than erase it
6. Choose the largest brush size that makes sense to cover the area you intend to blur
7. Take Hardness all the way down to make a natural transition from in focus to out of focus
8. Brush soften into the areas you want to blur
9. Make sure check "Hard Edges" so the blur is naturally clipped on the edges (instead of the fuzzy edges seen in the example photo)
10. You can adjust the amount of softness with the slider, before or after you've brushed and erased
11. When you got it right, click Apply to commit the change.