Monday morning musings for workplace watchers.
Too-Hot Labor Market?|Wage Floor Ballot Issues
Rebecca Rainey: Does the labor market need to cool off to tame rising inflation? The Biden administration, unions, and Democrats say no. But those who control interest rates, the Federal Reserve, disagree.
The labor market is a key factor in the equation of how we measure our economic health. Friday’s employment report from the US Labor Department showed that businesses added 261,000 new jobs in October—above expectations—and earnings went up from the month prior. While unemployment ticked up slightly to 3.7%, the report suggests that the labor market is still tight. Another DOL report released earlier last week showed 10.7 million job openings at the end of September, suggesting that employers are still struggling to find workers.
Federal banking officials say that the labor market must soften before it can start easing back on interest rates. Higher unemployment means that businesses aren’t fighting to find workers, and in turn, don’t have to raise wages to attract employees. Simply put, the reduction in wages lowers the amount of money Americans have to spend, reducing demand, and as a result, prices.
Members of the Biden administration, and in particular Labor Secretary Marty Walsh, don’t think unemployment needs to go up to help remedy rising prices.
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