The July jobs report was shockingly strong when it comes to job gains, but we’re still having trouble getting people into, and keeping them in, the workforce.
Why it matters: If we want to get inflation under control and avoid a deep recession, we must address the ongoing worker shortage by getting more workers back into the labor force.
By the numbers: Job gains were 528,000. Expectations were 250,000, so we beat them handily. There are now 32,000 more Americans employed than in February 2020. The pandemic gap is gone.
Be smart: The labor force shrunk by 63,000 though. And the participation rate continues to lag.
- If we had the same participation rate now as before the pandemic, there would be 3.4 million more workers in the labor force.
- Wages rose 0.5% from June and were up 5.2% annually from July 2021. However, inflation is above this level, so real wages are declining.
Bottom line: The strong job growth should quell talk of a recession, but we’re still observing weak participation numbers and missing workers. To get inflation under control, we have to get more workers into the labor force.
—Curtis Dubay, Chief Economist, U.S. Chamber of Commerce