US Economy Added Jobs in October, but Unemployment Remains High – Signs of Cooling

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The U.S. added 261,000 jobs in October, while unemployment ticked up to 3.7 percent, according to data released today by the Labor Department. That’s more jobs added than economists expected (190,000) but also higher unemployment than expected. CEI experts offer analysis on the problems employers are facing and what policymakers can do about it.

Sean Higgins, labor expert and CEI Research Fellow:

“The Labor Department’s report Friday that the unemployment rate had risen to 3.7 percent, adding 261,000 jobs in October, is a sign that the economy is cooling.

“Employers are still hiring but not at the rate that they were earlier this year when monthly job gains were around 400,000. With the labor force participation rate unchanged at 61.2 percent, employers have had to add further enticements just to get workers, forcing wages up 12 cents in October. With workers relatively scarce and increasingly expensive, many businesses are simply hiring less.”

Ryan Young, economic expert and CEI Senior Fellow:

“At first glance, it’s odd that the workforce can gain 261,000 jobs yet the unemployment rate can go up. But this turns out to be a mostly good sign. The unemployment rate only counts people who are actively looking for work. So that means that workers are finally starting to fill the record number of job openings, though the process is still in motion and will be for a while.

“Still, it’s concerning that the labor force participation rate remains below pre-COVID levels by 2 million or so people. While this month’s employment changes are small enough to just be the usual month-to-month noise, it’s also possible that it’s another sign of returning to normal.

“Policymakers can help people find good jobs by loosening excessive occupational licensing and other harmful workplace regulations, and by removing tariffs and other supply chain frictions that prevent good jobs from opening up in the first place.”