Rosalind Evans
The unemployment rate surged in July, and a specific detail within the labor data has raised concerns among economists. The increase in marginally attached workers has prompted discussions about the potential for a new, more competitive phase in the U.S. labor market.
The Alarming Rise of Marginally Attached Workers
Marginally attached workers, as defined by the Bureau of Labor Statistics (BLS), are available and willing to work but have not actively searched for a job in the past four weeks. This segment of the workforce is at risk of transitioning into “disconnected workers,” who drop out of the labor force due to low wages or high competition. According to Alí Bustamante, a labor economist and director of the Worker Power and Economic Security program at the Roosevelt Institute, the number of marginally attached workers has increased by 247,000 per month over the past three months. Bustamante emphasized, “That’s a warning sign for the labor market.”
Implications for the U.S. Labor Market
Nick Bunker, economic research director for North America at Indeed Hiring Lab, highlighted the significance of this trend. “A sustained increase in marginally attached workers would be a negative indicator for the U.S. labor market,” Bunker stated. He explained that it signifies people’s desire for employment but difficulty securing jobs. The concern is that this trend could indicate underlying issues within the labor market, potentially leading to a more challenging environment for job seekers.
A New Phase in the Job Market?
Despite the alarming rise, some experts urge caution in jumping to conclusions. Teresa Ghilarducci, a labor economist and professor at The New School for Social Research, pointed out, “If there is a sustained increase in marginally attached workers, that would be concerning. But I don’t see a sustained increase right now.” Ghilarducci also suggested that the recent jump could be a correction following unexpectedly strong job reports in the previous months.
Increased Competition and Slowing Job Growth
The job market is entering a new phase characterized by increased competition and slower job growth. Alí Bustamante elaborated, “In its new phase, the U.S. labor market remains strong, but workers are facing much more competition for open jobs than in the past year.” This heightened competition leads to longer job searches for new entrants and less frequent job switches by incumbent workers.
As the U.S. labor market navigates these changes, monitoring the segment of marginally attached workers will be crucial. While current trends raise concerns, observing how these dynamics evolve is essential. The labor market’s ability to adapt will determine the extent of the impact on both job seekers and the broader economy.
