The recent data on the unemployment rate in July has raised some concerns among economists, particularly in relation to marginally attached workers. These individuals, as defined by the Bureau of Labor Statistics, are those who are available and willing to work, but have not actively sought out employment in the four weeks leading up to the survey. This group is seen as being at risk of transitioning into “disconnected workers,” who ultimately drop out of the labor force due to factors such as low wages or intense competition.
According to a recent analysis by Alí Bustamante, a labor economist at the Roosevelt Institute, the number of marginally attached workers has been steadily increasing by an average of 247,000 per month over the past three months. Bustamante’s assessment of this group, along with unemployed workers, collectively known as U-6 by the BLS, serves as a warning sign for the labor market. The growing presence of marginally attached workers is seen as a negative indicator for the U.S. economy by many experts.
Nick Bunker, the economic research director for North America at Indeed Hiring Lab, believes that the rise in marginally attached workers signals a difficulty in finding suitable job opportunities. While it may be too early to predict the long-term trends in this segment of the labor force, experts like Teresa Ghilarducci, a labor economist at The New School for Social Research, are closely monitoring the situation. Ghilarducci emphasized the need to keep a close eye on the number of marginally attached workers in the coming months to gauge the overall health of the labor market.
A sustained increase in this category could lead to significant concerns about the state of employment in the U.S. economy. However, Bunker remains cautiously optimistic, stating that while the current trend is worrisome, there is not yet a definitive pattern of growth in marginally attached workers. The recent jump in this segment could also be a reflection of a correction following several months of stronger-than-expected job reports, according to Ghilarducci.
As more individuals enter the job market in search of employment opportunities, the competition for available roles has intensified. This shift in dynamics has brought about a “new phase” in the U.S. labor market, where workers are facing unprecedented levels of competition for open positions. Bustamante highlighted the fact that while the labor market remains strong, the increased competition signifies a potential shift in the overall landscape of employment in the country.
The rise in marginally attached workers and the changing dynamics of the labor market are key factors to watch in the coming months. While there are concerns about the implications of a sustained increase in this category, experts are cautiously monitoring the situation to assess the long-term impact on the labor market. As the U.S. economy continues to navigate through these uncertain times, understanding the challenges faced by marginally attached workers will be crucial in shaping future policy decisions and strategies for sustainable economic growth.