In a normal labor market, rising unemployment is a red flag. But while today’s labor market is far from normal, economists say last month’s rise in the unemployment rate actually shows the job market is normalizing.
One of the main reasons the unemployment rate rose in August is because more people are working or actively looking for work. The labor force participation rate increased by 0.3 points to 62.4%. Although one point lower than February 2020’s pre-pandemic levels, the August jobs report provided the first glimmer of hope that there may be some easing when it comes to labor shortages.
EY-Parthenon Chief Economist Gregory Daco said: “In the current climate where labor supply is a major constraint, this increase in labor force participation is actually very encouraging.
“If that causes a little bit more unemployment, that’s fine, because there are still a lot of job openings in the United States and we need to get more people back to work,” Walsh said. “Boosted” by rising power participation rates.
Gary Bartress, a labor economist at the Brookings Institution, has a similar opinion. “What we have been concerned about in this recovery is that too few people are looking for jobs, which is causing a tight labor market,” he said.
Improving the number of prime working Americans ages 25 to 54 joining the workforce was particularly encouraging, he said. “A lot of the increase in the private workforce has to do with the population that we were most concerned about,” he said.
That’s good news — even if they don’t find work right away, Burtless added. “[Some] entered the labor force, but they didn’t find jobs quickly and consequently joined the ranks of the unemployed,” he said, which is why unemployment has risen even as the economy has created more jobs. is.
Ken Kim, senior economist at KPMG, said that even after the unemployment rate rose, it was still very low by historical levels, and that policymakers and lawmakers would want more if they wanted to keep inflation under control. It suggests that they will have to endure high unemployment, he said.
“This 3.7% unemployment rate is probably pushing inflation further into the US economy through higher wages,” he said. “I believe the unemployment rate must rise to 5.5% … for inflation to return to the Fed’s target of 2%,” he said.
Aside from inflationary pressures, economists said stock market volatility, receding Covid fears and a new school year where face-to-face learning is once again the de facto norm are pushing more people to return to work. rice field.
“We’re also seeing improvements in health…perhaps to help alleviate some of the tensions we’ve seen on the childcare front,” Dako said. There are signs that some educators are returning to the workforce, by relieving parents (mainly mothers) from maintained childcare responsibilities. , is having a ripple effect.” They are not doing their job.
“It’s the fact that we know schools aren’t closed every time a case comes up,” he said.