There are two economic indicators that financial analysts, policymakers, and C Suite executives all look at to gauge the state of the economy: interest rates and the monthly jobs report.
On the first Friday of every month, the Bureau of Labor Statistics issues a jobs report. The report highlights month-to-month changes in job growth, wages, and unemployment. It also provides a snapshot of the state of the economy from the perspective of labor and human capital.
The data points in the report can be some of the first indicators pointing to a recession. If this information isn’t managed well, it can get out of control, stalling the economy.
A decrease in jobs results in decreased earned wages and increased demand for unemployment benefits and other social services. Smaller paychecks mean less discretionary income for workers to spend on goods and services, creating a dangerous spiral that can lead to even more layoffs.
This is why a lot of people pay attention to the jobs report. It’s usually a better indicator of how things are going on Main Street. But it isn’t perfect.
The jobs report simply counts the number of new jobs being created. It tells you where these jobs are being added but not the types of jobs being created. The quality of those new jobs matters more than the number itself.
Job growth may be happening, but it’s not necessarily happening for everyone. This essay is going to look at where job growth is actually taking place in the economy. It will reveal that there is a misalignment between the demand for workers and the supply of labor available to meet demand.
If you’ve been out of work for a while and are frustrated by your job search, that’s because you’re looking for a job in an industry that is no longer creating new jobs. Paying attention to the jobs report will reveal job creation is highly concentrated and isn’t being equitably distributed across the economy.