August US Jobs Report shows resiliency, despite inflation

The United States economy has, once again, proved its resiliency with the August Jobs Report that showed continued strength in the monthly report issued by the Labor Department that showed  a healthy 315,000 non-farm jobs exceeding predictions of 300,000, and while not the show stopping number from July, employment is on the rise and also with wages, and there was a slight uptick in the employment rate to 3.7 percent, but that is less worrisome than the still red-hot job market.

The good news is that the slowdown is what the Federal Reserve wants to cool down inflation, and those still high job numbers also come with higher wages, and those higher wages, even while nibbled from higher prices are causing the central bank worries on how to bring it all down, in a calibrated way, and not by the earlier miscalculations from the 1970s where two decades of robust inflation ruled, or rather ruined the day.

While some economists are concerned that this slowdown is what is needed, there are others that feel that last year’s predictions of a soft landing  for the nation’s economy are long gone.

The New York Times reported that, “The central bank is still all but certain to raise interest rates at its meeting this month, probably by at least half a percentage point and perhaps by three-quarters of a point. That decision may rest on what happened to consumer prices in August; that data is scheduled to be released on Sept. 13, a week before the Fed’s meeting.

Fed Chair, Jerome Powell, whos has been on the hot seat for some months is someone who is data driven, and it will take some more data for he, and the regional governors to make a final consensus, and vote, on the size of the increase; but, there are many who are predicting another huge increase, perhaps as much as 0.75 percent, but all bets are on the table.

Politically, the news couldn't have come at a better time for President Joe Biden whose ratings are still tanked, and with the midterms around the corner, and he had this to say:

“Jobs are up, wages are up, people are back to work. And we’re seeing some signs that inflation may be — may be, I’m not over promising — may be beginning to ease,” Mr. Biden said at the White House. Coupled with falling gas prices, he said, “America has some really good news going into Labor Day weekend.”

While American employers, for some time, have complained about not finding the right type of worker with the right qualifications, and many are still saying it, others have noticed an increase in more qualified people returning to work, and that very well maybe as the TImes noted, a reflection of inflationary process as many people try to walk the financial tightrope, especially with high rents, and especially in large urban areas as New York, Los Angeles and Chicago.

“And headlines about layoffs and a possible recession may be spurring some people to return to work while they can. A recent survey conducted by the career site ZipRecruiter found that job seekers were feeling less confident about their searches, and were putting more importance on job security than on flexibility.

In fact, labor force participation (LFP) did show an increase of 0.3 percentage point, at an overall 62.4 overall percentage.

“People are spending down that pandemic nest egg a little more quickly than they expected because of rising prices, and now feel a bit more nervous and a bit more desperate to find a job,” said Julia Pollak, the chief economist at ZipRecruiter.

Desperation may be facing American Blacks as they face dim prospects for greater employment, and this report gives them a 6.9 unemployment rate, nearly double that of whites, (but steady across the board over several months) making cuts into wealth building, not only to just meet basic needs.

Often times flourishing in the service sector, these are some of the jobs that drew them into great demand, and with some employers waving aside less previously held requirements such as a high school diploma, or misdemeanors, or even weak performance and job histories, these are the same areas that could be cut as the Fed works to calibrate ways to cool down, what is still a red hot jobs market.

That, as former Treasury secretary Larry Summers noted last year in an analysis, could result in double digit unemployment for Blacks, historically seen unemployment seen across the decades and eroding the wage increases they gained over the last few months.

Rising wages have become, despite inflation’s deleterious effect on them, a concern for Powell and this slowdown in employment which may increase by year’s end also has can help, but is a double edged sword for many, especially in the service sector, and with two  jobs available for every job seeker, the elevation in wages to 5.2 percent is being watched as a barometer for anti-inflation measures.

Coupled with supply chain issues and commodity pressures has increased the pressure for Powell to determine how to juggle all of the balls to fight inflation in the coming months.

That aside, many are quitting jobs to attain those higher wages, for those that need qualified employees, especially in the private sector, and as The Hill reported, “Job seekers on Indeed.com are looking for ever-higher wages, Ann Elizabeth Konkel, an economist at Indeed Hiring Lab, explained. The number of Indeed users seeking jobs with a $20 per hour wage rose above those seeking $15 per hour in June 2022, and the number of jobseekers looking for $25 per hour is up 122 percent over the past 12 months.”

Coming out on top for August were retail, 44,000, manufacturing, 22,000, and business services, 68,000, and healthcare with 48,000 - although still reduced from burn out by staff caring for COVID-19 patients. And, while these areas are expected to grow, they are also vulnerable to downturns, as predicted, by later Fed actions..

For now, just now, this is the time for those looking to gain, or change employment to do so now, to lock in either a better wage, or better working conditions. As the old adage says: “Strike while the iron is hot.”