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The economy needs more people to go job hunting

There are two ways to cool the employment market. One is to significantly delay recruitment. The other is for more people to enter the workforce. The latter is clearly preferable, but it is not clear how much the United States will acquire the latter.

Friday’s Ministry of Labor reported that the economy was added 428,000 seasonally adjusted jobs April — Same as March profits, indicating a surge in employment. The unemployment rate based on another survey is Held at a very low 3.6%..

The Federal Reserve now wants to cool the job market. The shallower the supply of workers, the higher wages and the harder it is to bring inflation back into control. But employment is not just a switch that central banks can turn on and off.This will take some time Rising interest rates To continue on the path to an economy with strong underlying demand.And the employer is very desperate for the workers, and the Ministry of Labor reported earlier this week, so as of March Record 1.9 jobs For each unemployed worker, a further slowdown in demand growth may not immediately hurt the employment market.

A great help to the situation is that more people are returning to the workforce. The unemployment rate is slightly above the 50-year low of 3.5% registered in February 2020, but just before the Covid-19 crisis, 1.2 million fewer jobs were employed. was. Population growth and shortages from pre-pandemic levels are even greater.

The reason for the low unemployment rate despite lower employment levels is that you must be willing to seek work in order to be counted as unemployed. Many people don’t do that. The labor force population ratio (the percentage of workers who are working or actively looking for) was 62.2% last month, but was 63.4% in February 2020. This is, of course, much better than the worst of the pandemics. But many things that could bring more people back into the workforce, such as vaccine availability, alleviating Covid-19 concerns, and ending additional benefits to the unemployed, are what economists want. As it was, there are many effects.

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Perhaps more people are looking for jobs as the warm climate arrives, Covid-19’s continued anxiety continues to ease, and the savings stockpile that many Americans have accumulated during the pandemic begins to decline. I will probably go. That’s certainly what the Fed is looking for: At his press conference on Wednesday Following the Federal Reserve’s meeting, Chair Jerome Powell said he and other members of the central bank’s interest rate setting committee “generally expect us to get some additional participation. I’m doing it. “

But if that increase isn’t seen, the Fed will be in a position to feel the need to lower employment growth early rather than slow it down. To do this, interest rates need to be raised more quickly, which increases the likelihood of overshooting and recession.

Write to Justin Lahart justin.lahart@wsj.com

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The economy needs more people to go job hunting

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