According to numbers from the Bureau of Labor Statistics (BLS), the American labor market is approaching so-called full employment, with the unemployment rate at a pandemic record-low of 3.9%. However, that still means that there are millions of Americans without work, and unemployment has yet to reach its pre-pandemic 3.5% rate.
In December, there were 199,000 jobs added to the economy, but this number falls significantly below the 249,000 jobs estimate set in November. Prior to a revision of the estimate, economists expected there to be more than 400,000 new jobs in Dec.
"There's no question that we still have people out of work, we have people that have left the workforce. We're working on also inflation," U.S. Secretary of Labor Marty Walsh told Yahoo Finance. "So we do have some work to move forward."
In the U.S., an unemployment rate of 4.5% or less is equivalent to full employment, meaning we are comfortably within that zone. Economics Professor with George Washington University Tara Sinclair told NPR that, even with the labor market at full employment, unemployment still won't hit zero. This is because of two significant forms of unemployment that don't aren't likely to go away: frictional and structural unemployment.
Frictional unemployment includes "people changing jobs and being unemployed between jobs, but it's while they're looking for another job," Sinclair says. "And so there's always going to be people that have perhaps just a brief gap between employment spells."
Structural unemployment, on the other hand, occurs when workers aren't able to find jobs for which they are qualified; "people may not have the right background, education, skills to qualify for the jobs in their area," Sinclair says.
While employers everywhere are struggling to fill positions, there may not be work available for everyone. One factor that has contributed to a rise in structural unemployment in the past few years is the shift to online work and online shopping. As our purchases move online, workers who have retail experience may struggle to find jobs. On the other side of the issue, qualified workers might not be able to find any employers offering the work and benefits they need.
Employment may be full, but jobs numbers still haven't recovered from the pandemic. According to Sinclair, the economy is currently short 4 million jobs compared to January 2020.
"And so there's this other piece of the puzzle," she says, "which is, what's happening with people who are not working right now but aren't being counted as unemployed because they are not looking for a job at all?"
Unemployment may be around 4%, but employment is at just 60%, and that 4% doesn't include people who have retired, left jobs to care for family, or simply given up on finding a job. For minority groups, unemployment is also much higher, currently sitting at over 7% for Black Americans. In fact, Black women were the only group that saw unemployment increase in the last month of 2021.