by Ace
The U.S. economy added just 199,000 jobs in December and the unemployment rate fell to 3.9 percent.Economists had forecast 422,000 jobs and an unemployment rate of 4.1 percent, although this week’s report on private payrolls from ADP indicating that the private sector added 807,000 jobs had created some anticipation that the official figure would be higher than the consensus forecast.
…In November, traditionally a big month for hiring, the economy added just 249,000 jobs.Note that the low unemployment rate is driven by the fact that after the lockdowns — and being paid not to work — many people have simply exited the workforce and stopped working.
From the 1970s through the turn of the century, there was an almost uninterrupted increase in the labor force participation as more women joined the workforce. During that period, it rose from a low of roughly 60% to an all-time high of 67.3% in the first quarter of 2000.From the early 2000s until the pandemic hit, the participation rate steadily declined and was about 63% at the end of 2019. It fell sharply in April 2020 as the U.S. began a period of lockdowns to try to contain the rapid spread of COVID-19, reaching a nearly 50-year low of 60.2% that month.
Although the rate has recovered somewhat, it continues to flounder below 62% because of a combination of factors brought on or exacerbated by the pandemic, such as fear about returning to a physical workplace and pandemic-related benefits that made it more financially feasible to go without a job.
While economists don’t identify a specific participation rate as ideal, it’s generally believed that a sudden, sizable reduction in the rate presents significant challenges to the smooth functioning of an economy. That’s because it represents a rapid withdrawal of productive resources — workers — that can’t be easily or quickly offset. This is one cause of the recent surge in inflation, not to mention the supply chain problems the global economy is currently experiencing.
If the rate doesn’t rise to pre-pandemic levels in the coming year or two, that would dash hopes for a stronger economic recovery and would signal high inflation and supply chain shortages will be with us for some time to come.A low unemployment rate because people are working is good.
A low unemployment rate because people aren’t working, and are being paid not to work, and so aren’t filing for unemployment, is bad, and leads to things like inflation and shortages.
Brandon says he doesn’t mind paying people not to work, and that employers should just “compete” with the impossible-to-compete-with “job” of being paid not to work.
Let’s Go Brandon.
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