Heritage Expert: Jobs Report Shows Weak Employment Recovery Weighing Down the Economy

Heritage Expert: Jobs Report Shows Weak Employment Recovery Weighing Down the Economy

Sep 2, 2022 2 min read

WASHINGTON—According to new numbers released on Friday, the economy added more jobs, but the unemployment rate increased to 3.7% in August, from 3.5% in July. 

Rachel Greszler, Heritage Foundation research fellow in economics, budget, and entitlements, released the following statement Friday in response to the numbers: 

“Employment in America today is still far below where it should be. Too few workers are weighing down the economy, which contracted in the first half of 2022. While it’s good news that the labor force increased substantially in August after declining the prior two months, there are still too few people willing and able to work. Despite the over-16 population increasing by 4.7 million Americans, there are 134,000 fewer people employed today than prior to the pandemic. If employment was at the pre-pandemic level, there would be 3 million more people working today. 


“And if millions of missing workers had been productively contributing to the economy, America might not be in the early stages of a recession. Canceled flights, delayed deliveries, unopened community pools, over-crowded emergency rooms, missing bus drivers and teachers, reduced public safety, shortages of goods and services, rising prices, and all the extra human resources needed to find and retrain new workers (instead of directly producing goods and services) demonstrate how missing workers have impacted not just the American economy as a whole, but our every-day lives. 


“A strong labor market and strong economy require that it pay to work and not pay to not work. The federal government has discouraged work through welfare-without-work giveaways, and inflation has eaten away $5,100 in real earnings over the past year, leaving the average worker almost $2,000 poorer.” 

BACKGROUND: The tax-spend-and-regulate Inflation Reduction Act and the reckless half-a-trillion-dollar student loan bailout are going to add to inflation and further distort the labor market. Already, young workers ages 20-24 have experienced some of the biggest declines in employment since the pandemic. This group accounts for 21% of the total employment gap, even though they make up under 8% of the over-16 population. And now student loan forgiveness, a continued pause in student loan repayments, and new income-based limits on repayment will further disincentivize work among young Americans. 

Policymakers could help increase employment among young workers by expanding alternative education options—including reviving Industry Recognized Apprenticeship Programs—and by making welfare work-oriented. While current policies to spend more, tax more, regulate more, and produce less will only make labor shortages and inflation worse, it’s not too late for policymakers to minimize the severity of the current economic downturn by removing government-imposed barriers to work and by getting the federal government’s fiscal house in order.  

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