The unemployment rate increased to 3.7% in August 2022 even as more Americans returned to work, according to a Friday release from the Bureau of Labor Statistics.
Total nonfarm payroll employment rose by 315,000, with notable job gains occurring in the professional services, health care, and retail trade sectors. However, the labor force participation rate — the share of working-age adults who are holding jobs or attempting to find one — increased by 0.3%, indicating that more Americans are now seeking opportunities. Unemployment had remained equivalent to or below 3.6% since March 2022.
“It’s noteworthy how we got to a higher unemployment rate. There was a significant increase in the number of individuals working and looking for work,” Bankrate Senior Economic Analyst Mark Hamrick said in a statement provided to The Daily Wire. “This is fresh confirmation of a lack of sufficient supply of workers.”
Indeed, labor force participation has continued to lag over the past two years — worsening a decades-long trend of low engagement in the job market. The metric dropped from 63.4% in February 2020 to 60.2% in April 2020 alone amid government lockdowns and business closures, according to data from the Bureau of Labor Statistics. As of August 2022, labor force participation climbed to 62.4%.
Policymakers at the Federal Reserve are tasked with maintaining low unemployment and stable inflation rates. The entrance of more Americans into the labor force amid millions of preexisting job openings could signal more aggressive rate hikes from the central bank.
“The Federal Reserve looks at the August jobs numbers, along with the recently reported number of job openings topping 11 million versus 6 million unemployed, and regards the labor market as still hot, even if the unemployment rate has now edged up from the recent low,” Hamrick continued.
Federal Reserve Chair Jerome Powell vowed last week that policymakers remain committed to a 2% inflation rate, which had been largely maintained over the past three decades. Officials announced interest rate hikes of 0.75% twice in the past two months.
“Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” Powell said in a speech delivered at the central bank’s annual symposium in Jackson Hole, Wyoming. “Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all. The burdens of high inflation fall heaviest on those who are least able to bear them.”
The low unemployment rate has been a bright spot in an economy beleaguered by inflationary pressures and supply chain issues — although the lack of available labor has worsened both phenomena. Beyond adjusting to changes in customer behavior as wealthy households seek bargains, major retailers have also passed the cost of higher wages onto consumers.
However, companies in technology and other sectors have slowed hiring or introduced layoffs. The United States met the rule-of-thumb definition of a recession — two consecutive quarters of negative growth — last month as the economy shrank at a 1.5% annualized rate in the first quarter and contracted at a 0.6% pace in the second quarter.