The unemployment rate in the US: current numbers and trends
The US unemployment rate showed a very low level in the last month and many cheered. However, this does not always mean good news for the economy. Read this article and understand why.
Understand how the Covid-19 pandemic impacted the unemployment rate in the US
In one day, Americans went to bed with a US unemployment rate of 3.5%. When they woke up, the country already had 14% unemployed. This is a small summary of the sensations that the pandemic generated when it comes to employment and income.
In fact, all these layoffs did not happen overnight. Thus, as of February 2020, the country was still satisfied with more than 90% of its working-age workforce employed in some lucrative activity. When the government announced the protection measures that restricted movement, everything changed.
Layoffs and bankruptcies happened en masse, and in April 2020, the percentage of people who could not find work was 14.7%. For comparison, numbers like this were only achieved during the Great Depression of the 1930s. However, two years after this unemployment spike, the situation is completely different.
Today, the US unemployment rate has already reached the pre-pandemic level. In addition, salaries are improving and the average is 2 jobs for every person looking for an opportunity in the market. At times like this, that cousin of yours who doesn’t work and lives with his parents has no excuses for not looking for a job.
In short, the scenery looks excellent. However, incredible as it may seem, this low unemployment rate at the moment also generates some bad developments. Want to understand better what we’re talking about? Then read the article below and learn how the US unemployment rate is affecting the national economy as a whole.
What is the current unemployment rate in the US?
In fact, the US ended May this year with an unemployment rate of 3.6%. Thus, it is the first time since the beginning of the pandemic that this indicator has returned to pre-pandemic levels.
This data from the Bureau of Labor Statistics (BLS) presents a very relevant fact for our country. Of people of working age looking for work, only 3.6% have not yet been able to find a job. In terms of population, this number represents 5.9 million people who still visit companies and deliver resumes.
The BLS also released another very interesting data on the current situation of companies and jobs in the country. In fact, the research institute has recorded increases and decreases in payrolls in recent years. Since 2015, this indicator has always presented positive results.
This means that companies were always hiring and/or improving the salaries of their employees. In fact, things only started to change in March 2020. For the first time in 5 years, this index registered a reduction of US$ 1.5 million in the payrolls of non-rural companies in the country.
However, that doesn’t look like anything when we buy with what was registered the following month. In March of that year, the drop was US$ 20.49 million. However, the record was positive again in the following months and only registered a slight drop in December of the same year.
Since then, the data show positive results. This could mean companies are catching their breath and hiring new employees. Thus, the indicator “Jobs Won or Lost, Month by Month” confirms what we are seeing in the US unemployment rate.
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What factors influence the unemployment rate?
In fact, any factor that encourages (or discourages) the hiring of employees interferes with the unemployment rate. At the moment, there are two very important main factors that caused this indicator to drop so much. Among them, we must mention the resumption of post-pandemic activities.
Thus, most stores were reopened and several new companies were created. Thus, the market has made available a large number of job opportunities. According to BSL, in May alone, 390,000 job openings were made available across the country.
Also, wages are higher. In fact, this increase probably arises to offset the effects of inflation. High inflation and low wages discourage workers. In fact, when this is the scenario, workers see their purchasing power always decreasing due to inflation. The solution then is to improve wages.
With higher salaries, people tend to look for more jobs and stay in those vacancies.
How does the unemployment rate affect the economy?
When unemployment drops, employers have to compete for people who are still looking for opportunities that are now outnumbered. In theory, the way to capture this workforce is to offer higher wages. However, this increase in wages has a side effect. As people are earning more, more money ends up entering the market.
In this way, the general demand for consumption grows. Realizing that people have more money and are more likely to spend, companies raise the prices of their products and services. Thus, general prices tend to rise and end up pushing inflation up. In fact, this is not good for the market or for society.
So what we can do is “tighten our belts” until the recession “turbulence” passes. However, how much longer should we wait until we are free of this recession? In fact, that question was answered in one of our daily published articles.
To check it out, click on the link below and learn about the opinion of the country’s leading economic experts on the subject.
Will the US enter an economic recession? Understand what economists say on the subject and how to prepare your pocket for the future.
About the author / José Gonçalo
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