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Employers add enough jobs to keep the unemployment rate near a 50-year low

A MARTÍNEZ, HOST:

As we head into the Labor Day weekend, we're learning more about the health of the labor market. U.S. employers added 187,000 jobs last month, and that's just about what forecasters were expecting. NPR's Scott Horsley joins us now to discuss the details of today's employment report. Scott, put this into context for us, if you would. What does that number, 187, tell us about where the job market is heading?

SCOTT HORSLEY, BYLINE: You know, it's a solid but not spectacular number. Most industries are still hiring. We saw job gains last month in health care, hospitality, manufacturing. Even construction is holding up well, adding 22,000 jobs in August, although that's a sector that's typically hard hit when interest rates go up a lot like they have been. Transportation did see a loss of jobs last month, mainly because the shutdown of that big Yellow trucking company. And we also saw a loss of jobs in movie production as a result of the writer's and actor's strikes.

Overall, job growth has cooled off in recent months compared to the beginning of the year. Job gains for June and July were revised down. Julia Pollak, who's chief economist at the job search website ZipRecruiter, says one sign of a less frenzied job market today is fewer workers are quitting their jobs in search of better opportunities.

JULIA POLLAK: Workers are quite confident in their ability to land better, alternative jobs. But they're nowhere near as high as what we saw earlier in the pandemic, when there were so many job openings that people were in the midst of a great reshuffling.

HORSLEY: Many of the measures the government uses to track the job market are now back to where they were before the pandemic. And keep in mind, that was a very good job market.

MARTÍNEZ: Yeah. The thing is, the unemployment rate ticked up in August, 3.8%. Should anyone be worried about that?

HORSLEY: I don't think so. We're still not seeing widespread layoffs, with the exception of that Yellow trucking collapse. The big reason that unemployment rose last month is because more than 700,000 people came off the sidelines and started looking for work, and not all of them found jobs right away. The growth in the labor force is really a good sign. It reflects a lot of confidence in the job market. Obviously, if unemployment continues to go up, that might be worrisome. But Pollak says, so far, this remains a pretty healthy job market.

POLLAK: I think this will come as a relief to the Federal Reserve. The slowdown is coming in the form of reduced hiring and reduced job openings, not in the form of a huge surge in layoffs and unemployment.

HORSLEY: You know, the Fed has been concerned that the labor market was out of balance. And we're starting to see a better match now between the supply and demand for workers.

MARTÍNEZ: Yeah. One indicator of a tight job market that the Fed watches closely is wages. So what's happening with people's paychecks?

HORSLEY: Wages are still going up, although not as fast as they were a year ago. The good news is prices aren't going up as fast either, so now wage gains are not being gobbled up by inflation like they were last year. Average wages in August were up 4.3% from a year ago. The annual inflation rate in July was 3.2%, so workers are getting a real boost in their buying power.

It's also good that we are seeing this growth in the workforce, especially among women. The share of working-age women who are in the job market is close to an all-time high, which is encouraging. A potential hiccup, though, is the federal aid for child care centers that was put in place during the pandemic is just about to run out. And if child care gets harder to come by, that could make life difficult for a lot of working parents. And that could be a drag on the workforce.

MARTÍNEZ: NPR's Scott Horsley. Thanks, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.