The recent data on unemployment rates in July has raised concerns among economists due to the significant increase in marginally attached workers. These are individuals who are willing and available to work but have not actively searched for employment in the four weeks leading up to the survey. The fear is that these workers may transition into what is known as “disconnected workers,” individuals who have completely dropped out of the labor force due to various reasons such as low wages or high competition.
According to an analysis conducted by labor economist Alí Bustamante, the segment of marginally attached workers has been growing at an alarming rate of 247,000 workers per month over the past three months. When combined with unemployed workers, this group is known as U-6 according to the Bureau of Labor Statistics (BLS). Bustamante views this trend as a warning sign for the labor market, indicating potential challenges ahead.
Nick Bunker, the economic research director for North America at Indeed Hiring Lab, echoes Bustamante’s concerns, stating that a sustained increase in marginally attached workers could be a negative indicator for the U.S. labor market. This rise suggests that while there is a desire for employment, there are obstacles preventing individuals from finding suitable jobs. However, Bunker also notes that it may be premature to predict the continued growth of this labor segment at such a rapid pace.
Labor economist Teresa Ghilarducci from The New School for Social Research emphasizes the need for caution in interpreting the recent jump in marginally attached workers. While it could be a reflection of a correction following unusually strong job reports in previous months, it may also signify a shift in the labor market dynamics. As more individuals enter the job market, competition for available positions has intensified, creating a potential new phase in the employment landscape.
In light of these developments, Alí Bustamante suggests that the U.S. labor market is entering a new phase characterized by continued strength but heightened competition for job seekers. This contrasts with the previous year’s trends, indicating a shift in the job market environment. While the situation is concerning, experts believe it is essential to monitor the trajectory of marginally attached workers closely in the coming months to gauge the long-term impact on the labor market stability.
The rise in marginally attached workers poses a significant challenge for the labor market, signaling potential hurdles for individuals seeking employment. It highlights the importance of ongoing monitoring and analysis to address emerging trends and potential risks in the job market. As the situation evolves, policymakers and economists must remain vigilant to ensure the stability and resilience of the labor market in the face of changing dynamics.