U.S. Job Growth Remains Strong, Defying Fed’s Rate Strategy

In another red flag, despite the acceleration in wage increases, the number of people who either are working or want a job has continued to sink.

The overall labor force participation rate ticked down in November, to 62.1 percent. In February 2020, it stood at 63.4 percent. Some of that decline is due to retirements by older workers, but the share of people in the prime of their careers — 25 to 54 years old — fell to 82.4 percent, 0.6 percentage points below its prepandemic level.

Theories about the shortfall abound, including persistent complications from long-term Covid-19. Whatever the reason, the shrinking labor force makes the Fed’s job more difficult, since employers may raise prices to cover wage increases needed to attract workers.

Nevertheless, consumer spending has remained strong. As a result, many businesses have continued to expand, even if with less urgency than they did when the economy was roaring back from its deep freeze in 2020 and 2021.

“It feels to me like we’re not in a decline, just in a consolidation, kind of a flattening,” said Jon Guidi, the chief executive of HealthCare Recruiters International, whose clients include medical clinics, pharmaceutical companies and biotech firms. “I don’t get a strong negative indication on anything. It’s ‘Hey, Jon, we still need to hire, but maybe not in as much of a rush as we were a few months ago. Maybe we’ll be a little pickier.’”

Mr. Guidi’s industry, health care, has some of the highest job-opening rates in the economy as employers seek to win back workers who bore the brunt of dealing with Covid. More broadly, job postings and the share of workers quitting their jobs have been declining from record highs earlier in the year, but are still significantly elevated.

Initial claims for unemployment insurance have remained low, suggesting that even if business is falling off, employers are hesitant to shed workers whom they tried so hard to hire. Hotels and restaurants added 88,000 jobs in November, and still have nearly a million positions to go before returning to February 2020 levels.

Article source: https://www.nytimes.com/2022/12/02/business/economy/jobs-report-november.html