In an unexpectedly positive turn of events it seems as though the American economy has improved in the employment department, according to a report released by the Labor Department on Friday morning.
The report establishes that last month alone, the market was endowed with around 222,000 jobs: a 26.9% step up from the initial estimated value of 175,000 by Wall Street economists. 50,000 of these jobs were novel additions that had not been reported in previous months' payrolls. While the unemployment rate itself has risen from 4.3% in May to 4.4% in June, this is simply because of the higher volume of jobs themselves; the average hourly wage has actually grown by 2.5% since last year, implying that there is ultimately a greater net benefit for individual workers and the workforce as a collective.
"The payroll number is well above expectations," said Jim O'Sullivan, chief United States economist for High Frequency Economics. "But the wage numbers are certainly weaker than expected, so it keeps alive the whole debate about the relationship between slack and inflation and how far the Federal Reserve should allow the unemployment rate to fall."
It was mainly jobs in the tertiary sector that gave the economy the boost that it needed, as service-oriented occupations constituted 162,000 of the overall jobs added to the market last month.
On one hand, the strong and stable labor market conditions will inevitably draw in more job seekers to the workforce, increasing the unemployment rate and potentially hampering economic growth. On the other hand, a bigger applicant pool implies an increase in the availability of varied skillsets, talent and augmented diversity, all important things considering that the Trump administration has anyway encumbered international professional talent by reforming immigration laws.
Either way, there still surprisingly seems to be a dearth of willing workers in areas with small businesses. The owner of Star Cleaning Systems in Ohio said, "very few people show up for interviews, and if they do, they don't show up for the job." Part of the problem exists because while wage rates are rising, they aren't rising fast enough. Often, people need a car or home to be able to sustain a daily job nearby but they cannot afford gas or rent with payments of $10 an hour. This seems to be a case of quantity trumping quality.
Princeton economist Alan Krueger claims demographics entailing an aging workforce could hamper growth of wage rates. This is due to the fact that older workers are less likely to get a raise than their younger counterparts, and since there are older workers in the market right now, the wage rate primarily reflects the figures that represent them.
Another problem could be that there exists a mismatch between laborers' skillsets and job requirements, which has generated a gap that rising wages cannot fill. People may be available to do the job, but not in a manner that is efficient or warrants a pay raise. Hence, retraining programs that could embellish the skills of those who were experts in fields that were relevant prior to the 2008 financial crisis may improve the economy by leaps and bounds.