According to the U.S. Bureau of Labor Statistics’ preliminary August 2023 monthly jobs report, the U.S. economy added just over 22,000 new jobs. This new reality creates a murky landscape for workers and employers alike. Even with this small increase, the unemployment rate still jumped to 4.3%, the most recent peak in almost four years. Over the last three months, the economy has added an average of 29,000 jobs per month. At the same time, the broader job market is beginning to cool down.
The data from this report paints a troubling reality that while some sectors, like logistics, are booming, other sectors are going through deep depression. The goods-producing sectors — construction, manufacturing and mining — have lost jobs for four consecutive months since May. In August, losing industries outnumbered gaining industries by more than 2.5 to 1. This trend begs the question of whether current levels of employment are sustainable, let alone the long-term state of our economic environment.
Black Workers See Rising Unemployment
Today, the unemployment rate for Black workers has jumped to 7.5%, the highest level since October of 2021. This increase points to a much more alarming trend. It jumped from 6% in June to 6.8% and eventually to 7.2% in July. Economists have noticed an interesting trend in the labor market. When labor market power declines, unemployment for Black workers tends to rise faster than it does for White workers.
“The unemployment rate for Black workers will usually rise more than for [White workers] when the labor market weakens, but they usually move in the same direction,” – Dean Baker
This gap indicates more overarching systemic barriers in the workforce that have a greater impact on minorities. As economic headwinds continue to pose challenges, many analysts are concerned about the long-term implications for workforce equality and economic stability.
Healthcare Sector Remains Strong
The healthcare sector continued to lead the luminous charge in August, adding a dazzling 46,800 jobs. This increase was a bright spot in the otherwise challenging picture for goods-producing industries. The medical field has been a juggernaut for creating jobs in recent years. This trend increases the already high demand for services and educated professionals.
We think this is a really positive development and that’s exciting. Those cyclical and structural factors — especially imposed by trade/immigration policies — are affecting the general job market trends too. Together these policies bake several layers of uncertainty into an environment that makes hiring plans difficult no matter the sector.
“It’s not just the fact that there are these tariffs being implemented; policy uncertainty makes it very hard for businesses to commit to hiring plans,” – Zhao
The mixed signals from different sectors illustrate a fragmented job market, where certain industries thrive while others struggle to maintain employment levels.
Economic Outlook and Future Prospects
This is not just the opinion of a conservative editorial board. As of August, the overall diffusion index had fallen to 49.6, indicating that the majority of industries are now experiencing a contraction in employment versus an expansion. In a labor market that experts are calling “stalling,” the trade-offs may result in a sharper-than-expected economic slowdown.
“When unemployment starts to rise, those impacts can start to stack up very quickly and unpredictably,” – Zhao
Yet even amid the ongoing structural challenges, some economists are cautiously optimistic about sustaining long-term growth. They argue that faster interest rate cuts would help release some of this pent-up demand and support stronger overall hiring. OE Joe Brusuelas – Growth and hiring, he believes, will soon reaccelerate. He thinks so, too, thanks to changes in monetary policy and a series of tax cuts.
“We expect growth and hiring to reaccelerate as the combination of interest rate cuts, tax cuts and full expensing of business investment bolster demand for labor later this year and early next,” – Joe Brusuelas
Ron Hetrick emphasizes the significance of interest rate adjustments, indicating that such measures signal a readiness to invigorate economic activity.
“When you lower the interest rate, the Fed is signaling, ‘We think it’s time to start this engine again,’” – Ron Hetrick
We shouldn’t forget that most workers are still down on their luck and doubtful about their future.
“For 85% of workers, they’re not seeing a lot of the jobs added,” – Kory Kantenga
This sentiment certainly highlights some of the day-to-day life realities that workers of all kinds are facing in today’s work world.