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.
