The bad news from the June jobs numbers, released Friday, can be also the Great news.
The unemployment rate rose to 4 percent last month, by 3.8 percent, which in many contexts would likely be reason to worry about a softening economy. yet the details of This specific particular jump from the jobless rate actually imply Great things for the economy.
The labor force rose by 601,000 people last month, driving the proportion of the civilian adult population in which can be either working or looking for work up by 0.2 percentage points, to 62.9 percent.
The unemployment rate rose because not all of the people looking for work found This specific immediately. in which suggested they were ready as well as willing to fill the jobs in which employers have kept creating at a healthy rate — yet another 213,000 positions in June alone.
The month-to-month swings from the size of the labor force can be large because of statistical error. So This specific may prove to be a random blip in which can be erased as more data become available.
yet taken at face value, This specific’s a sign in which the hot job market can be succeeding at pulling people off the sidelines as well as into the work force. This specific’s easy to imagine people who have become disengaged by the work force who, in This specific tightening job market, are more likely than they were a few years ago to see help wanted signs everywhere, or to have friends as well as acquaintances urge them to start working.
This specific can be the opposite of the trend by 2010 to 2012, when the unemployment rate was falling yet simultaneously millions of Americans gave up even looking for work.
in which’s Great news because This specific implies in which the United States economy isn’t overheating, as well as in which This specific may have yet more growth potential than has been obvious.
Combined with wage growth in which can be merely stable — average hourly earnings are up 2.7 percent over the last year — This specific suggests the Federal Reserve doesn’t need to worry too much in which the economy can be overheating or in which an outbreak of high inflation can be imminent. (The downside of This specific, of course, can be in which workers aren’t seeing the kinds of rapidly rising wages you might expect in a time of low unemployment.)
In contrast that has a few years ago, the economy can be currently close enough to full employment in which the availability of workers can be likely to be a binding constraint on how much more This specific can grow.
There are, to be simplistic, only two ways the economy can keep growing. Either employers can squeeze higher productivity out of the existing labor force, getting greater output per hour of work. Or they can find a completely new supply of workers.
When there can be a shortage of workers as well as employers poach by one another, the economy tends to grow the first way, as employees shift toward higher-wage, higher-productivity companies.
The completely new numbers, if sustained from the data from the months ahead, suggest improvement on the second front as well: the supply of workers.
The labor force participation numbers aren’t exactly soaring to completely new heights — the rate was higher in February than in June. yet in June, at least, This specific labor supply effect was the more influential one. Employers have been successful at coaxing people into the work force to fill vacant jobs.
in which doesn’t mean there aren’t risks ahead, of course. A rapidly escalating trade war could cost jobs in some key industries. There have been signs of a resurgence in work force participation from the past in which have then reversed themselves, including as recently as This specific past winter.
yet with the economy in mostly sound shape, This specific question — of how many more people are out there who might wish to work if employers can induce them to — can be one of the most crucial. as well as last month, at least, the numbers on This specific front were pointing from the right direction.