Transcript:
Easan Arulanantham:
Unemployment came in at four, which 4%, which was up from 3.9. But there’s so many jobs added, how does that work out?
Tom Vaughan:
Yeah, so we had more jobs and unemployment went up. Right? That doesn’t seem like it matches together. The I think the issue really is, first of all, the unemployment number itself, the 3.9%. Now, as a 4%, there’s an awful lot of components that come into that. And so you theoretically could have higher unemployment, because you have certain industries, let’s say, auto manufacturing, ends up laying people off, because they have to shut down their line for a while, while they’re waiting for more chips, or you know, those types of things that can happen. The actual labor force can shrink itself. Also, you can get people that just decide they’re not going to pursue the jobs any longer. Maybe they go back to school, or you know, whatever it might be. So there’s all these kind of strange variables that come into play into the unemployment report, generally speaking, over a long period of time, and certainly, since the bottom of the pandemic, we’ve seen higher job growth and lower unemployment, right. I mean, that’s been but you get these anomalies, especially a point 1% anomaly, which is what we’re talking about here, that happened just because of the way that these things are calculated. And I think one of the things about unemployment that isn’t really talked about enough, is, is what I call kind of, you know, real unemployment, just all of it. It’s it’s the people that are actually on unemployment, you know, right now, those people that have kind of fallen off the rolls of unemployment that are still wanting a job, those people that are I guess we call underemployed, so they, you know, have a part time job, but they really want a full time job that pays more, that number can be quite a bit higher.
And so focusing on unemployment itself, you know, isn’t that critical? To me, it’s that total, kind of real unemployment factor, as far as that goes, that has been shrinking also, you know, slowly, but surely, you know, things are getting back to normal. But part of that is some people just aren’t, you know, coming back to work, maybe a to work or family, that now one of them is staying home with with the kids, and they’ve just made adjustments to deal with that. And such to the pandemic created a chance for people to reset, and some people have, and maybe that comes back around, and we get more and more people back into the workforce. But we did end up with a really high number of retirements. So kind of that baby boomer that was within three years of retirement retired now or, you know, last year or what have you. And so that kind of shrunk that, you know, available workforce that’s out there. And so a lot of open jobs, almost 11 million open jobs still. And so that’s that’s a part of the supply chain constraint, the jobs are open. People are there’s not enough people taking the jobs. And so that demand is continuing to push the, you know, the need for the product or service, and employees aren’t quite there yet. So that’s partly why we’re having this inflationary spike. So that’s why today’s jobs reports important. So we’ll see how that plays out. Yeah, but it’s very, very interesting to watch, I think the employment part is, is critical.
Easan Arulanantham:
Yeah, so with like, these big job reports, does that mean wages are gonna go up. And so because then inflation turns are kind of follow through with that?
Tom Vaughan:
Well, we have a higher job report growth like this. Theoretically, you have more people coming out to work. And the more people that come out to work, the less competitive the job openings are, theoretically, over a period of time. So I mean, let’s say for example, if there’s more people looking for work than there are jobs, wages could go down, right? Because there’s, it’s basically the employer has a choice of people and the new employees have no leverage. And existing employees have no leverage either, because no jobs open. So that’s a recession. It happens all the time. In this situation, we’ve got the opposite. We have more jobs that we do people that want to take those jobs. So the more people that take jobs, and theoretically, the less pressure that would put on increasing wages, if that makes sense. In my opinion, I could be missing something there and the economics of how that works. But I think, you know, if I’m an employer, and I’ve got all these people, and they’re asking for more money, and then I have some choices over here for people that will take my job at the price that I’m willing to pay right now. I might, you know, take that person instead because they’re cheaper, right? Theoretically. And so the more people that are looking for work, and that’s how I kind of look at the jobs report, just that people accepted the jobs because the there’s 11 million open jobs. And so, you know, people accepted the jobs As a whole it’s very specific industry specific and I’m talking in generalities but yeah it’s interesting.