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Three years after the pandemic contributed to a massive wave of layoffs, furloughs, career holidays, and retirements, the American workforce is finally back on track.
With a higher proportion of males and females either working or looking for jobs, the job market is in a good position – for now. However, the Fed’s intention to crush inflation with more interest rate hikes could put tens of thousands back on the unemployment line.
Back to the old grind
The US unemployment rate held steady at 3.5% in February 2020, according to the Bureau of Labor Statistics — between 3% and 5% tends to be what states are hoping for. But after the coronavirus swept the world, unemployment in the United States jumped to 15% in just two months. Unemployment in the United States has since fallen to 3.6%, and much of that can be attributed to the peak entry of women into the labor force. The share of women in the workforce during the peak working period — ages 25 to 54 for all genders (Google it, Don Lemon) — hit an all-time high last month at just under 78%, according to the BLS.
For starters, women are having fewer children, which allows many of them to seek work outside the home. In 2022, nearly 3.7 million babies will be born in the United States, according to the Centers for Disease Control, down 15% from 2007. But working parents are also in luck. Because job opportunities have outgrown the pool of available workers nearly 2 to 1, employers need to compromise on better salaries, benefits, and schedules while hiring:
- said William Rodgers of the St. Louis Federal Institute for Economic Justice The Wall Street Journal that employers are “more willing to work with candidates—in this case working with mothers, or fathers in general. Tight labor markets can help penalize those who discriminate in hiring and compensation.”
- Americans also get paid more these days, and after two years, wages are finally starting to outpace inflation. This means that people are now less held back by strict budgets and can splurge a bit, which in turn can help avoid a recession that seems less likely and ominous than it did a year ago.
Don’t be too excited: The Fed has already raised interest rates 10 times in the past year and is planning at least one more before the end of 2023, which could put many people out of work, especially in sectors with low job security like entertainment and construction. In the Fed’s latest forecast, the unemployment rate is expected to rise to 4.1% by the end of the year followed by 4.5% for the next two years.