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Economy Adds 528,000 Jobs as Unemployment Ticks Down to 3.5 Percent

The good news is that all the reports about workers’ wages not keeping pace with inflation were mistaken. The bad news is that wages are growing at a…

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1 year ago

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The unemployment rate for Hispanics fell to a record low 3.9 percent in July.

The economy added 528,000 jobs in July. In addition, the gains for the prior two months were revised up by a total of 28,000, bringing the average over the last three months to 437,000. The number of jobs in the economy is now above its pre-pandemic level. It is likely to be revised still higher in the preliminary benchmark revisions that will be reported later this month.

In addition, the household survey showed the unemployment rate falling to 3.5 percent, tying a 50-year low. The survey showed a gain in employment of 179,000 after showing declines the prior three months. The U-6 measure of labor market slack remained at its all-time low of 6.7 percent, as the fall in unemployment offset a modest increase in the number of people involuntarily working part-time.

Wage Growth Accelerates to 5.0 Percent Annual Rate

The pace of growth in the average hourly wage had been slowing, but there was a big jump reported in July. The average hourly wage grew at a 5.0 percent annual rate comparing the last three months with the prior three months. This is still below the 6.1 percent annual rate seen at the end of 2021, but considerably faster than a pace consistent with the Fed’s 2.0 percent inflation target. 

The fastest wage growth was in the lowest paying sector. Wages for hotel and restaurant workers rose at a 9.4 percent annual rate when comparing the last three months with the prior three. It seems that, contrary to most reporting, inflation has not been hitting those at the bottom hardest.

Job Gains Broadly Based Across Sectors

The July report showed a healthy pace of job gains in most sectors. In the goods sector, manufacturing added 30,000 and construction added 32,000, despite the slowdown in housing starts. Part of this story may be that with supply chain pressures being eased, contractors are better able to finish homes already started (there has been a huge gap between starts and completions), and also to do repairs and renovations on existing homes. 

In the service sector, restaurants and health care were big job gainers, adding 74,100 and 69,600 jobs, respectively. The retail sector added 21,600 jobs. Hotels were an exception to the positive story, reportedly losing 200 jobs in July. 

Hard-Hit Sectors Added Jobs

Some of the sectors that have had difficulty adding workers saw healthy gains in July. Local governments added 37,000 workers, with 27,400 of these being in education. This was the largest gain in the sector since a gain of 59,100 last July. 

The childcare sector added 8,800 jobs in July after adding 11,500 in June. This is a gain of 2.1 percent in employment in the sector since July, although childcare employment is still down 8.4 percent from pre-pandemic levels.

Airlines Added 7,000 Jobs in July

The airline industry added 7,000 jobs in July, after adding 7,200 in June. Employment in the sector is now 9.1 percent above its pre-pandemic level.

Average Weekly Hours Are Stable at 34.6

Last year, the length of the average workweek increased from pre-pandemic levels, presumably because employers that had difficulty finding new workers had their existing workforce put in more hours. It has now been at 34.6 hours for four consecutive months, a level also reached before the pandemic. This presumably means employers are no longer finding it as difficult to hire workers.

Unemployment for Hispanics Hits Record Low

The unemployment rate for Hispanics fell 0.4 percentage points in July to 3.9 percent, the lowest on record. This fall was due to a reported 1.3 percentage point drop in the unemployment rate for Hispanic women, who saw their unemployment rate fall from 4.5 percent to 3.2 percent. 

By contrast, the unemployment rate edged up by 0.2 percentage points for Black workers to 6.0 percent, which is 0.6 percentage points above the pre-pandemic low.

Share of Unemployment Due to Quits Edges Higher

The share of unemployment due to people voluntarily putting their jobs rose to 14.8 percent. This is high, reflecting a strong labor market, but below peaks of more than 15.0 percent hit in 2000, 2019, and earlier this year.

Long-Term Unemployment Fall Sharply

The share of long-term unemployed (more than 26 weeks) fell by 3.7 percentage points to 18.9 percent, a new low for the recovery. There was also a drop of 182,000 in the number of short-term unemployed (less than 5 weeks). This means that insofar as employers are increasing layoffs, the affected workers are having little difficulty getting new jobs.

Number of People Not in the Labor Force Due to COVID-19 Falls

The number of people who reported that they were neither working, nor looking for work, due to the pandemic, fell to 548,000 in July, with just over half (276,000), being prime-age (ages 25 to 54). These are people who say that they are not interested in working because they are ill, are caring for a sick family member, or are worried about being infected.

These numbers indicate that the pandemic is not a major factor keeping people out of the labor force at this point. 

Labor Market Remains Strong

The July jobs report makes last week’s discussion of a recession look more than a bit silly. The jobs market remains very strong by any measure. In fact, there is zero evidence of any wave of layoffs increasing unemployment, as short-term unemployment is actually down somewhat from the June level.

The real issue is whether the labor market is too strong. Clearly this pace of job creation is not sustainable when the unemployment rate is already at a half century low. The pace of wage growth seems to have picked up some, with the average hourly earning series now corresponding to the Employment Cost Index data reported last week.

The good news is that all the reports about workers’ wages not keeping pace with inflation were mistaken. The bad news is that wages are growing at a pace that exceeds the Fed’s 2.0 percent inflation target.

CEPR produces same-day analyses of government data on employment, inflation, GDP and other topics.
Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.

The post Economy Adds 528,000 Jobs as Unemployment Ticks Down to 3.5 Percent appeared first on Center for Economic and Policy Research.

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Vitalik Buterin voices concerns over DAOs approving ETH staking pool operators

The Ethereum co-founder proposes a solution that could lower the likelihood of any individual liquid staking provider growing to a point where it poses…

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44 mins ago

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October 1, 2023

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The Ethereum co-founder proposes a solution that could lower the likelihood of any individual liquid staking provider growing to a point where it poses a systemic risk.

Vitalik Buterin, the co-founder of Ethereum, has expressed worries regarding decentralized autonomous organizations (DAOs) exerting a monopoly over the selection of node operators in liquidity staking pools.

In a September 30 blog post, Buterin issues a warning that as staking pools adopt the DAO approach for governance over node operators—who are ultimately responsible for the pool's funds—it can expose them to potential risks from malicious actors.

“With the DAO approach, if a single such staking token dominates, that leads to a single, potentially attackable governance gadget controlling a very large portion of all Ethereum validators.”

Buterin highlights the liquid staking provider Lido (LDO) as an example with a DAO that validates node operators. However, he emphasizes that relying on just one layer of protection may prove insufficient:

“To the credit of protocols like Lido, they have implemented safeguards against this, but one layer of defense may not be enough,” he noted.

ETH staked by category chart. Source: Vitalik Buterin

Meanwhile, he explains that Rocket Pool offers the opportunity for anyone to become a node operator by placing an 8 Ether (ETH) deposit, which, at the time of this publication, is equivalent to approximately $13,406.

However, he notes this comes with its risks. "The Rocket Pool approach allows attackers to 51% attack the network, and force users to pay most of the costs," he stated.

On the other hand, Buterin highlights that having a mechanism to ascertain who can act as the underlying node operators is an inevitable necessity:

"It can't be unrestricted, because then attackers would join and amplify their attacks with users' funds."

Related: Ethereum is about to get crushed by liquid staking tokens

Buterin further outlines that a possible approach to address this issue involves encouraging ecosystem participants to utilize a variety of liquid staking providers. 

He clarifies this would decrease the likelihood of any one provider becoming excessively large and posing a systemic risk.

“In the longer term, however, this is an unstable equilibrium, and there is peril in relying too much on moralistic pressure to solve problems," he stated.

Magazine: Are DAOs overhyped and unworkable? Lessons from the front lines

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DOJ readies witnesses in Bankman-Fried trial, spotlight on FTX assets

This initiative also encompasses their comprehension of Sam Bankman-Fried’s remarks and conduct, particularly regarding FTX’s asset management.
…

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44 mins ago

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October 1, 2023

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This initiative also encompasses their comprehension of Sam Bankman-Fried's remarks and conduct, particularly regarding FTX's asset management.

The Department of Justice (DOJ) has affirmed its plan to summon former FTX clients, investors, and staff as witnesses in the upcoming trial involving Sam Bankman-Fried, the former FTX executive. This will shed light on how these individuals viewed their interactions with Bankman-Fried and his company. 

The DOJ submitted a letter motion in limine on Sept. 30, to enable them to get the interpretation of the witnesses on FTX’s treatment of customer assets, which will hold significant importance.

Importantly, these testimonies are intended to provide valuable perspectives on the interactions between the accused and these witnesses. This initiative also encompasses their comprehension of Bankman-Fried's remarks and conduct, particularly regarding FTX's asset management. The DOJ intends to emphasize the experiences of both retail and institutional clients who entrusted substantial assets to FTX with the belief that the platform would safeguard them securely.

Court filing in the U.S. District Court for the Southern District of New York. Source: CourtListener

Furthermore, a distinctive situation has emerged concerning one of the DOJ's witnesses, referred to as "FTX Customer-1," who resides in Ukraine. Given the ongoing conflict, there are difficulties associated with traveling to the United States to provide testimony. Consequently, the DOJ has suggested using video conferencing as a viable alternative. However, Bankman-Fried's defense has not yet approved this proposal.

Nonetheless, the legal team representing Bankman-Fried, led by lawyer Mark Cohen, has voiced concerns about the jury questions put forth by the DOJ. According to Bankman-Fried’s defense, these interrogations insinuate guilt on Bankman-Fried's part, potentially undermining the principle of "innocent until proven guilty."

Additionally, the defense contends that these inquiries may not effectively uncover the jurors' inherent biases, especially if related to their personal encounters with cryptocurrencies. Moreover, certain questions could inadvertently guide the jury's perspective instead of eliciting authentic insights, possibly compromising the trial's impartiality.

Related: Sam Bankman-Fried’s lawyer challenges US gov’t proposed jury questions

With the jury selection scheduled to start on Oct. 3, closely followed by the trial, the spotlight is firmly on this high-stakes legal confrontation. This case underscores not only its immediate consequences but also underscores the vital importance of transparent communication and unbiased questioning in upholding the principles of justice.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

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Vitalik Buterin voices concerns over DAOs approving stake pool operators

The Ethereum co-founder proposes a solution that could lower the likelihood of any individual liquid staking provider growing to a point where it poses…

Published

2 hours ago

on

October 1, 2023

By

The Ethereum co-founder proposes a solution that could lower the likelihood of any individual liquid staking provider growing to a point where it poses a systemic risk.

Vitalik Buterin, co-founder of Ethereum, has expressed worries regarding decentralized autonomous organizations (DAOs) exerting a monopoly over the selection of node operators in liquidity staking pools.

In a September 30 blog post, Buterin issues a warning that as staking pools adopt the DAO approach for governance over node operators—who are ultimately responsible for the pool's funds—it can expose them to potential risks from malicious actors.

“With the DAO approach, if a single such staking token dominates, that leads to a single, potentially attackable governance gadget controlling a very large portion of all Ethereum validators.”

Buterin highlights staking protocol Lido (LDO) as an example with a DAO that whitelists node operators. However, he emphasizes that relying on just one layer of protection may prove insufficient.

“To the credit of protocols like Lido, they have implemented safeguards against this, but one layer of defense may not be enough,” he noted.

ETH staked by category chart. Source: Vitalik Buterin

Meanwhile, he explains that Rocket Pool offers the opportunity for anyone to become a node operator by placing an 8 Ether (ETH) deposit, which, at the time of this publication, is equivalent to approximately $13,406.

However, he notes this comes with its own risks. "The Rocket Pool approach allows attackers to 51% attack the network, and force users to pay most of the costs," he stated.

Related: Ethereum is about to get crushed by liquid staking tokens

Buterin highlights that a possible approach to address this issue involves encouraging ecosystem participants to utilize a variety of liquid staking providers. 

He clarifies this would decrease the likelihood of any one provider becoming excessively large and posing a systemic risk.

“In the longer term, however, this is an unstable equilibrium, and there is peril in relying too much on moralistic pressure to solve problems.”

Magazine: Are DAOs overhyped and unworkable? Lessons from the front lines

Read More

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