Employment and Unemployment: October Figures Bring Troubling Signs

The Bureau of Labor Statistics’ (BLS) employment report for October was a mixed bag. The unemployment rate rose by 0.2% to 3.7%. There were 306,000 more unemployed people than in September.  A rate of 3.7% is far from full employment. When one adds people who want to work but have not looked recently and part-timers wanting full-time work, the real UE rate is 9.1% and the number of unemployed is 15.5 million. But it is true that 3.7% is, historically, a low official level of unemployment. And it will look better next year if the Federal Reserve pushes us into a full-blown recession. 

Several groups saw their unemployment rates increase marginally. The rates for whites and African Americans rose 0.1%. But others were hit hard. The unemployment rates for adult women rose 0.3%; for Hispanics, 0.4%; and for Black teens, a startling 3.8%. 

Another possibly troubling signal is that the labor force fell by 79,000 from August through October. That is not much, but normally the labor force grows each month. Were more people choosing to drop out rather than go back to the office? Many have come to like working at home. And, of course, it’s still difficult to find affordable quality child-care. 

In the latest JOLT (Job Openings and Labor Turnover) numbers from a separate BLS report that lags a month behind the unemployment report, job vacancies turned up a bit to 10.7 million. That’s high and good for job-seekers. But are pay and job quality getting less attractive? I do not know. And are there more bogus listings? Some job-seekers and experts believe there are more ghost jobs out there. For example, hiring managers may keep job postings open even though they do not have the budget to hire and don’t intend to hire soon. But they think they might make contact with desirable employees. 

JOLT numbers through September do not reveal big changes in other key indicators. True, the rate of hiring is down over the year from 4.4% to 4%, and more in the information sector, from 4% to 3.3%. Lately we’ve heard a lot about layoffs at Twitter and Meta, and those may show up in data soon. But the overall rate of layoffs and discharges has hardly changed over the year, oscillating around 0.9% to 1%. In September, the rate was actually down in the information sector.

The Great Resignation and Resistance

Quit rates, which partly reflect worker confidence about finding new and better jobs, are still high. They declined a little in recent months, but they are still higher than in any month from 2001 through 2020. If worker confidence is waning, you don’t see it here. That part of the Great Resignation—high quits—is still on. And so is the collective manifestation of rising worker militancy: on-the-job organizing and action. The revolution has not arrived, but things that were unheard of in 2018 and 2019 are happening now. Some 257 Starbucks shops have voted to unionize (57 shops voted no). On November 17, workers at 114 Starbucks units struck for better pay, more staff, and union recognition. This is happening against a viciously anti-union employer.

Meanwhile, almost 50,000 academic support staff on University of California campuses—teaching assistants, researchers, and others—went on strike November 14. Among the things they want are better pay and more financial support for child-care and health costs. It is the largest strike by academic workers in U. S. history. The strike is still on, but there is progress at the bargaining table.

So, sections of the working class are still angry and in action. For now, the Great Resignation and the newest unionism continue. But a recession with high unemployment—which flows naturally out of Federal Reserve policy—will mean additional millions of unemployed desperate for jobs and employed workers less casual about quitting.

Inflation and Wages

High inflation is real, and it obviously hurts working-class people more than the affluent. Your turkey cost 20% more this year and potatoes 15% more.  (If you bought a lot of cranberries in the bag, you were smart. They are down 14%.)  Overall, the price for food eaten at home is easing, but it is still 12.4% over one year ago. That’s huge.

As to energy prices, gas at the pump declined 20% over three months, then rose in October. It is still 17.5% over a year ago. The cost of fuel oil that is burned to produce heat and electricity jumped 20% in October and is up 68.5% over the year!  

In light of such numbers and our experience of what we see every time we buy something, it may be hard to believe that the average total increase for all consumer items has been relatively modest over the last four months, July through October. Adding four months of increases yields a 0.9% increase. In the previous four months (March through June) prices increased 3.8%. The prices of vehicles, apparel, and medical care have fallen or slowed their rise. Your solution to inflation is simple: stop buying food and energy products.

For all purchases combined, inflation hurts. Wages are up but not by as much as prices. The purchasing power of average pay is down 2.3% over the year. But the outcome of further Fed tightening on the money supply to restrain inflation will mean something worse for many workers: more will lose their jobs and others may become less rebellious for fear of losing them. 

Instead of risking a full-blown recession as the Fed continues to raise interest rates, policymakers should have been striving to find better weapons to tamp down prices. You say, we don’t know what will work. I say, how will we learn if we don’t experiment? Only rarely have anti-inflation solutions other than recession been tried in the last fifty years. 

When thinking of alternatives, start with the oil companies, which are making out like bandits. And not because of new and useful things they are bringing to consumers. Exxon Mobil’s profits surged in the third quarter to $19.66 billion and Chevron’s rose to $11.23 billion. These facts represent trends that have been around for months. Politicians have noticed but taken little action. Why no serious congressional investigations of price-gouging and proposals for real reform? Why no serious proposals from officials in the president’s cabinet for more constant regulation and anti-trust action? It is flabbergasting that federal officials act as though there is little they can do about a huge rip-off of consumers in a key area of high inflation. 

Except for Federal Reserve monetary actions, federal policy on inflation, with a few exceptions, is hands off and hope for the best. That is, “We who govern you are essentially helpless.” It’s still, in a way, laissez-faire government.