In the first month of 2024, the U.S. economy added 353,000 jobs and the unemployment rate remained steady at 3.7 percent. Employers are ready to get aggressive with hiring, but Washington’s regulatory policy fumbles are holding back labor force participation.
Statement by Ryan Young, CEI senior economist:
“Unemployment has been under 4 percent since February 2022. Real GDP has been growing at a faster-than-average pace since the third quarter of 2022. We’ve made the soft landing. Now the question is if we can get it to stick. Underlying economic conditions are in good shape, so the biggest risk comes from Washington.
“Industrial policy failures are piling up, most recently at a delayed $20 billion Intel chip factory in Ohio that received a CHIPS Act subsidy and an EV recall from Tesla affecting 2 million vehicles. Boondoggles like these will dampen growth and employment for the next several years. But just as a larger dog can host more fleas, the economy is creating net jobs despite those drags.
“The only real employment problem is the labor force participation rate, currently 62.5 percent. Although it is back to pre-pandemic levels, it is still low by historical standards. Policymakers can help by turning their attention away from industrial policy and toward reforms like pruning excessive permitting, occupational licensing, and paperwork requirements that make it difficult for people to find or create jobs.”
Statement by Sean Higgins, CEI research fellow:
“The Labor Department’s report Friday that the nation added 353,000 jobs in January indicates that the labor market has not cooled as much as previously thought and remains historically tight. January’s gains were well above the average of 255,000 for the year and along with December’s revised gains of 333,000, indicate that the employers are still aggressively hiring when they can. On top of that, average hourly earnings increased by 19 cents in January and are up 4.5% over last year, indicating that the employers are willing to pay a premium to fill those spots. Rising wage and the increased prevalence of strikes and related labor issues may have made employers wary but their need for workers still outweighs those other factors.”