Job creation did fall short of expectations in May, with the economy adding 138,000 jobs, but that’s nothing to be worried about as the labor market is tightening.
The unemployment rate fell from 4.4 percent to 4.3 percent in May, to a 16-year low, and as the unemployment rate falls, the less jobs the economy can be expected to create each month. Additionally, there’s a “natural rate of unemployment.” Due to the seasonal nature of some jobs (think: agriculture), or even the basic fact that people are often unemployed for a brief period of time in-between jobs, there is always going to be some unemployment, even in an economy where everyone can find a job.
According to the St. Louis Federal Reserve, the natural rate of unemployment current is 4.72 percent (above the actual unemployment rate – which is a rare occurrence).
House Ways and Means Committee Chairman Kevin Brady (R-Texas) said the data shows that an overhaul of the tax code is critical for more robust jobs and economic growth.
“While jobs are being created, too many hardworking families are not seeing their paychecks increase because of a slow-growing economy,” Brady said in a statement.
“As our committee has heard from business leaders over the past few weeks, permanent, pro-growth tax reform is the most important opportunity we have to help job creators hire more workers, increase paychecks and reinvest in our local communities,” Brady said.
Economists had projected about 185,000 jobs and expressed disappointment in the latest figures that show 60,000 fewer jobs than expected in March and April.
“Some of this is due to businesses finding it more difficult to locate workers with the right skills as the labor market gets tighter,” Faucher and Hoffman said.
H/T The Hill
One of the many unfortunate aspects of the Obama economy was a shrinking labor force, which is what the Trump economic agenda should address. While there were 9.9 million jobs added under Obama’s presidency, 14.6 million people left the labor force. While some of those would’ve left regardless (such as those who entered retirement), there was a massive accelerating in those leaving the labor force because they gave up looking for work, or took early retirement rather than go through the hassle of looking for work.
Among one of the great challenges the economy faces now is a skills gap. As our universities churn out liberal arts majors, they’re creating graduates that are educated but unskilled. Take a single sector like technology as an example: “there will be approximately 1 million more computing jobs than applicants who can fill them by 2020,” according to Code.org (which is basing their estimates on those from the U.S. Bureau of Labor Statistics.
Unemployment is low – but there are still millions more who could be employed as Trump continues to undo the damage that Obama has inflicted.
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