The Bureau of Labor Statistics has released its monthly report and says that a whopping 538,000 jobs were added last month, about twice the expected number. They also revised upwards the jobs gains for the previous two months. This means that all the jobs that were lost during the pandemic have now been regained. The unemployment rate also edged down to 3.5%, another low number.
Since the GDP had declined for two straight quarters, there had been concerns that the economy was entering a period of recession. But this robust job growth contradicts that idea since in a traditional recession, people are thrown out of the labor market on a large scale. It also contradicts the idea that employers are finding it hard to get workers.
“The unexpected acceleration in non-farm payroll growth in July, together with the further decline in the unemployment rate and the renewed pick-up in wage pressure, make a mockery of claims that the economy is on the brink of recession,” said Michael Pearce, senior US economist for Capital Economics.
The US has now regained all 22 million jobs lost when the pandemic hit in 2020, the Labor Department said. The jobless rate has also returned to its pre-pandemic level, hovering at 50-year lows.
For Hispanic and Latino workers, the 3.9% jobless rate in July was the lowest since record keeping began in 1973.
That more people are getting jobs is undoubtedly a good thing. It is not just hard economically when people cannot get jobs and earn a living, it can be psychologically devastating for people to try to get jobs and fail, making them feel useless.
Product manager Ian Charles lost his job a few weeks ago when his financial technology company announced a wave of cuts, citing the shift in investor sentiment that was making it harder for start-ups to raise money.
The 33-year-old was surprised – and initially, panicked, remembering how difficult his job search had been a few years earlier. But this time, he said, “it’s a totally different ballgame.”
“People have really been coming out in droves on LinkedIn – both people I actually know from grad school and former colleagues to just random recruiters,” he said.
He said he felt confident he would have a new job lined up in a few weeks.
“I was panicking at the start … but this time around I’ve seen in a month how much easier it’s been to get traction,” he said. “Opportunities keep coming, which is really weird to me because everyone keeps talking about how we’re headed for a recession and things could be slowing down, but I don’t see it reflected on the ground.”
Wages are also rising, another good thing, going up by 5.2% over the last year, but this is tempered with the fact that inflation is rising faster, meaning that their real income is declining. That is not good but having your wages rise is satisfying on an emotional level even if the increase gets eaten away by higher prices so that there is a net decline in real income. It likely feels better to get a larger paycheck than to have a decline in the nominal wages by the same amount with inflation flat. This article looks at some of the factors as to why wages do not keep pace with inflation.
The average number of hours worked per week has not changed. There are concerns that the large increase in jobs may be due to people having to take two or more jobs to maintain the same standard of living that they could formerly have with just one job. That would not be good but I have not seen much support for that idea.