Yahoo Finance’s Myles Udland breaks down 3 big charts he’s watching this week, outlining some of the big trends set to drive the labor market in the months ahead.
Participation, wages, and the total labor gap
After a few lackluster months of hiring, the June jobs report came through.
On Friday, we learned nonfarm payrolls grew by 850,000 last month, with economists viewing the report as a signal that some of the hiring pressures we’ve documented within the labor market are starting to ease.
But underneath the headline data — which also showed a slight uptick in the unemployment rate as the number of people looking for work increased — we wanted to flag a few charts outlining some of the big trends set to drive the labor market in the months ahead.
The first comes to us via Nick Bunker, an economist at Indeed, who noted that while overall labor participation was flat at 61.6% in June, we saw a notable uptick in prime-age participation.
During the month, the labor force participation rate among adults 25-54 rose to 81.7%, the highest since the pandemic began and matching the level seen in January 2018. As you may recall, the economy during that year was deemed strong enough by the Fed to warrant four rate hikes.
After the financial crisis, the decline in participation among prime-age workers was a major sign that the economic recovery was underserving workers and growth at-large. The rise in this rate over the second half of the 2010s was one of the most encouraging economic trends underway — before COVID-19 disrupted the economy.
A continued rebound in participation among those enjoying the fastest career and earnings growth will be a key gauge of the health of the post-pandemic economic recovery.
Another key area economists have been watching is the battered leisure and hospitality space, which bore the brunt of layoffs and furloughs during the most acute phase of the crisis.