The Bureau of Labor Statistics’ job and unemployment report for the month of June is pretty positive. The official unemployment rate, derived from a sample of households, stayed low: 3.6% for the fourth month in a row. The rates for Asian-Americans and Hispanics were also quite low at 3.3% and 4.3%. But unemployment rates stayed high for disabled people (8.2%), African Americans (5.8%), and teens (11%).
Also, according to the National Jobs for All Network, the real national unemployment rate, including people who wanted jobs but did not fit the BLS’s requirements for a job search, was 9%. The total of truly unemployed was 15.2 million people. The reasons why these people did not snatch up all those jobs employers are offering have been discussed often in this column. They include lousy pay (it’s still falling in real terms, after inflation), lousy conditions, unfriendly supervisors, unhealthy workplaces, and limited access to affordable child-care. Also behind the slow take-up of job opportunities is people’s confidence that with all those vacancies, one can find a job quickly if that is absolutely necessary.
More Jobs But Fewer Employed?
A separate count (the payroll or establishment survey) of several hundred thousand organizations shows that non-farm business and government employers added 372,000 jobs. That has to be counted as a tepid positive, considering the expectation that the Federal Reserve’s money crunch had already kicked the economy into a recession.
But there are few signs of a recession yet. One possible indicator of trouble ahead comes from the household survey: the number of employed Americans fell by 315,000 in June. But this number is a part of the household survey that we aren’t supposed to trust too much. The sample is much smaller than the payroll sample of organizations that showed 372,000 more jobs. We will have to wait to see which number was more prophetic.
Meanwhile, a leading economic journalist, Don Lee of the Los Angeles Times, has suggested that the coming recession might not mean many layoffs. All those job vacancies–11.3 million at last count (May)–indicate that employers are still desperate for workers. (By the way, this number of job vacancies is more than twice what it was in 2006 and 2007, just prior to the Great Recession.) But if something like a recession begins, will bosses remember how hard it has been to hire people? And to the degree that finances allow, will they strive to hold on to employees as long as they can? Some say they will.
Perhaps there won’t be a substantial economic recession. That depends on how much the Federal Reserve raises interest rates, and that depends partly on whether inflation rates drop. Right now, average wage increases are slowing (bad for workers, good for the Fed); and there are signs that prices in some areas are falling: memory chips, fertilizer, and even gas at the pumps. But, surprise: for the latter, prices are falling more slowly than they rose. There is scholarly evidence and clever labels for what many of us suspected. Gas prices go up faster when the price of oil rises than they go down when the price of oil falls. According to Paul Krugman, it’s called asymmetric pass-through, or rockets and feathers.
We get the next government report on consumer prices July 13. Most experts are not predicting a moderation of inflation rates. So it will be full-speed ahead for the Fed’s Recession Train, and, eventually, that will mean fewer job offers, more unemployment, less consumer spending, and depressed business activity. Maybe something kinda like a recession. Fed Chair Jerome Powell told a congressional committee on June 22 that he did not intend that the Fed’s interest rate hikes should cause a recession, but he acknowledged that it was “certainly a possibility.” Right now, I’d say a recession was quite possibly certain.
Articles that were especially useful include:
Paul Rugaber, “Powell tries to reassure a skeptical Senate Panel,” Los Angeles Times, 6/23/22, A8.
Don Lee, “Recession might be ahead, but it could be mild,” Los Angeles Times, 6/23/22, A1, A9.
Don Lee, “Recession might not mean layoffs,” Los Angeles Times, 7/8/22, A1, A12.
Paul Krugman, “Working Out: Rockets, Feathers, and Prices at the Pump,” The New York Times, 7/8, 2022, online newsletter.