The recent increase in the unemployment rate in July has caught the attention of many economists. However, what has truly alarmed experts is the rise in marginally attached workers within the labor force. These individuals are classified as those who are available and willing to work, but have not actively searched for employment in the past four weeks leading up to the survey. This trend poses a risk of potentially transitioning into “disconnected workers,” who might completely drop out of the labor force due to various factors such as insufficient wages or increased competition.
According to a detailed analysis by Alí Bustamante, a labor economist and director of the Worker Power and Economic Security program at the Roosevelt Institute, the number of marginally attached workers has been steadily increasing over the past three months. On average, there has been a monthly growth of 247,000 individuals falling into this category. When combined with unemployed workers, as classified by the Bureau of Labor Statistics as U-6, this group becomes a cause for concern in the labor market. Bustamante has labeled this trend as a warning sign that warrants further attention and analysis.
Nick Bunker, the economic research director for North America at Indeed Hiring Lab, has expressed his worries about the implications of a rising number of marginally attached workers. He believes that this trend signifies a growing difficulty for individuals in finding suitable employment opportunities. However, while the situation may seem bleak, experts caution against jumping to conclusions too soon. It is unclear whether this segment of the labor force will continue to expand at such a rapid pace, and it remains to be seen if this trend is sustainable in the long run.
Teresa Ghilarducci, a prominent labor economist and professor of economics at The New School for Social Research, has also weighed in on the issue. She emphasizes the need for close monitoring of the situation in the coming months to determine the trajectory of marginally attached workers in the labor force. The recent spike in this group may be a corrective response to the overly optimistic job reports of the previous months. As the job market begins to cool down and more individuals enter the job market, competition for available positions is on the rise, signaling a potential shift in the dynamics of the labor market.
Bustamante highlights the evolving nature of the U.S. labor market, noting that while it remains robust, there is a noticeable uptick in the level of competition among job seekers. This shift signifies a new phase in the market characterized by increased challenges faced by workers in securing employment. As the landscape continues to change, it will be essential for policymakers and economists to closely monitor these developments to assess the overall health of the labor market and make informed decisions moving forward.