WASHINGTON—According to new numbers released on Friday, the economy added 517,000 jobs in January and the unemployment rate edged down to 3.4%.
While the unemployment rate remains low, that’s because millions of Americans remain on the sidelines not looking for work. There are still an estimated 2.6 million fewer Americans working today than at pre-pandemic employment rates.
Rachel Greszler, Heritage Foundation senior research fellow in economics, budget, and entitlements, released the following statement in response to the numbers:
“Job gains were strong in January, as more workers filled open positions and striking government education workers returned to their jobs. Yet, uncertainty is high and confidence is low as businesses and investors have increasing concerns about the Federal Reserve’s ability to fight the inflation that it helped fuel by financing trillions of dollars in government spending.”
“Unemployment will almost certainly rise over the year, with significant risks of a recession in 2023. What will matter most is whether the unemployment rate rises because of layoffs or because of people rejoining the workforce.
“While a layoff has the same impact on the unemployment rate as a worker joining the labor force, layoffs mean a smaller economy and higher government spending on social welfare programs. Workers coming off the sidelines and looking for jobs don’t reduce output or increase government spending. With 11 million job openings, there’s great potential for the 2.6 million missing workers to come off the sidelines, adding to the economy and reducing welfare costs.
“Unfortunately, the Biden Administration has done all it can to discourage work through sideline subsidies like the ongoing student loan pause and massive SNAP and Obamacare expansions. This administration continues to close doors to work opportunities through actions like canceling Industry Recognized Apprenticeship Programs and pursuing regulations that put small businesses’ and independent workers’ livelihoods at risk.
“The key to growth is rising productivity and incomes, but Americans who are employed are working far fewer hours at significantly lower inflation-adjusted wages. And Americans lost $2 trillion of wealth from their 401(k)s last year, leaving workers—especially older ones—less financially prepared for the future.”