Unemployment Increases to 9 Percent As Labor Force Rises:
New job seekers add to unemployment levels.
The national unemployment rate rose to 9 percent last month. The Labor Department reported yesterday May 6, 20111, that unemployment moved up marginally in March and much of this increase may be caused by the economy turning around. The increase in the unemployment rate may be misleading as over 244,000 new jobs were added. A few months back, such gains in unemployment would have been heralded. So how did unemployment move up?
New Entrants to the Job Market Signal Stronger Recovery Ahead
The rate of new workers joining the labor force will eventually decrease which will cause wages to rise as the total number of employed reaches ‘capacity’. We believed this would happen if the labor force participation rate rose due to word spreading about new opportunities. Temporary jobs are decreasing which may be evidence that employers are willing to invest more risk in new employees -longer term. This would be a positive sign that employers have more full time needs and have more stability – hence less importance on the need for temporary workers that can be trained easily and then sacked. People are sensing that opportunities are ripe and taking efforts to look for more work, this will help consumer spending which accounts for most economic growth.