The U.S. economy added 187,000 jobs in August 2023, and the unemployment rate rose to 3.8 percent, according to data released Friday by the Labor Department. CEI analysts said a variety of factors helped drive the increase in unemployment: the collapse of a trucking company saw many jobs lost in that sector but also a surge of people looking for work.
Ryan Young, CEI Senior Economist:
“Job growth slowed in August, but that is to be expected at some point. Even the slower 187,000-job growth last month annualizes to more than two million new jobs. Job openings remain high, and employers are offering higher wages to fill them.
“The fact that unemployment went up to 3.8 percent in August despite net job growth is actually a sign that workers are responding to the higher wages being offered. It means more people went from unemployed but not looking for work to actively looking. The unemployment rate only counts people who are actively seeking work, not those sitting on the sidelines. The labor force participation rate went up from 62.6 percent to 62.8 percent, which means more than 300,000 people decided to re-enter the workforce in August. The higher unemployment rate suggests some of them are still looking for a good fit.
“Today’s news, along with other recent data on GDP growth staying above two percent and core inflation remaining above four percent, makes the Fed more likely to raise interest rates at its next meeting in about three weeks.”
Sean Higgins, CEI Research Fellow:
“Friday’s news from the Labor Department that the unemployment rate had jumped to 3.8 percent in August, up from 3.5 percent the prior month, is in part due to the collapse of trucking company Yellow Corp., the nation’s number three carrier. It accounts for almost entirely the 34,000 transportation industry jobs lost last month. Job losses from businesses that relied on Yellow Corp.’s service likely account for some of the rest. The long-troubled company filed for Chapter 11 bankruptcy in early August after its main workers’ union, the International Brotherhood of Teamsters, balked at accepting a haircut for its members to keep the company afloat. This month’s numbers are a sobering reminder of the power that organized labor still has to shape the broader economy.”