According to the U.S. Department of Labor, the U.S. economy added 678,000 jobs in February, and the jobless rate fell to 3.8%. In addition to February adding a massive amount of jobs, it was also reported that prior months were stronger than originally reported. This can be seen by the adjusted numbers for last December and January, 588,000 and 481,000 respectively.
Unemployment Rate Drops
The jobless rate has now fallen from its previous figure of 4.0% to 3.8%, just as the labor force participation rate rose from 62.2% to 62.3%. While this may look good for the U.S. economy, many business owners are feeling the impact of a low unemployment rate by having to compete harder than ever to secure quality workers. The impact can be seen by looking at average hourly earnings, which have increased as much as 5.1% over the past 12 months.
While the labor market is on the fast track to recovery, there are still many concerns looming that could impede the progress the U.S. has made. Some potential impediments include soaring oil prices, geopolitical turmoil in Europe, and looming rate increases from the Federal Reserve.
Federal Reserve Impact
The labor market adds increased responsibility from the Federal Reserve. The inflation rate is 7.5% as of February, which is far above the central bank’s usual target of 2%. While the Fed plans to raise interest rates multiple times this year to prevent the economy from overheating policymakers must do so at a modest enough pace that would continue to enable job growth.
Wrap Up
There are a lot of variables to take into account when hiring a new employee from this restricted pool. On top of this, the hiring process has become more complex as more and more laborers are asking for increasingly high pay, high turnover rates, and other appeasements employees are requesting as they are looking to leverage the tight labor market. If you are looking to hire in the near future, it is important to start preparing now!
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