What is the labor force participation rate?
In a sign that labor shortages may persist, the proportion of adults working or looking for work has fallen to 62.2%, putting it well below the pre-pandemic level of 63.4%. The labor force participation rate has been on the rise overall since 2020 as workers returned to the hot labor market after childcare or remaining unemployed due to COVID-19 concerns.
But that quota has remained roughly flat this year, suggesting that most Americans intent on returning to the workforce have done so. This can lead to continued upward pressure on wages as employers crowd out a limited group of workers.
Last month, average hourly wages rose 12 cents to $32.58, cutting the annual increase from 5% in August to 4.7%.
Economists say the prospect of persistent labor shortages and increased wage growth will likely mean more substantial interest rate increases by the Federal Reserve, which is determined to tame inflation stuck below a 40-year high of 8.2%.
“This report is a green light for further Fed rate hikes and rate hikes,” says Jason Schenker, president of Prestige Economics.
Are we in a recession now?
The Fed’s moves are increasingly expected to dampen borrowing and economic activity, and leading economists are now forecasting a recession in 2023. As a result, many companies are bringing back hiring plans.
Identity, a 33-employee marketing and PR firm headquartered in Birmingham, Michigan, added three employees this year and, with a 10% increase in sales, was set to bring in two more.
But company president Mark Winter is growing wary.
“We haven’t seen a slowdown in trade demand but we know it’s coming,” Winter says.
