The employment news has everyone confused. The Bureau of Labor and Statistics (BLS) reports today 428,000 jobs were added [DATA HERE] which is good. We want to see people getting back to work. However, simultaneously the number of people employed dropped by 363,000 and the labor participation rate dropped from 62.4 last month to 62.2 this month [Table A, DATA]. The unemployment rate remains unchanged at 3.6 percent.
That wildly conflicting set of data has led to a seriously frantic discussion about what is going on. Here’s my take…. The majority of the irreconcilable data can be reconciled on this one basic Main Street employment scenario that is never tracked, people are job jumping.
Inflation is crushing main street workers at an astounding pace. Housing, energy, gas and food prices -all the unavoidable stuff- are hitting blue collar workers the hardest.
However, in reality the key businesses inside the sectors with the most rapid employment gains, Leisure and Hospitality, are the last to raise prices.
Generally those jobs fall under the category of service workers. The leisure and hospitality sector gained 78,000 jobs last month.
What we are seeing in the sporadic data is wage growth being driven in majority by increased entry wages on the hiring end of the employment relationship.
Because inflation is hitting so hard, so high and so quickly; and because businesses are slower to respond to the wage needs of current payroll staff; people are quitting one employer to take a linear job at another employer at a higher entry wage. This is the fastest way to get a raise. This is job jumping.
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