The Story Behind the Government's July Jobs Report

Are jobs keeping up with the costs of inflation?

The Story Behind the Government's July Jobs Report
A "now hiring" sign at a Home Depot store in San Rafael, Calif., on Aug. 5, 2022. (Justin Sullivan/Getty Images)
Andrew Moran

President Joe Biden celebrated the better-than-expected July jobs report on Aug. 5, calling it "the result of my economic plan to build the economy from the bottom up and middle out."

Although the White House had initially anticipated a lower figure, the Biden administration and other Democrats in Washington celebrated the numbers.
The headline figure of 528,000 new jobs last month allowed the United States to get closer to the 22 million positions that were lost during the COVID-19 pandemic. But market analysts are digging through the data and finding new trends and fresh hurdles that the economy still needs to overcome.

Are Workers Worried About a Recession?

A July Insight Global survey found that almost 80 percent of U.S. workers fear losing their job in a recession, with 54 percent of respondents saying they would be willing to take a pay cut if it meant staying employed.
The June CNBC All-America Workforce Survey found that 83 percent of workers identified a recession as their top near-term concern. That was followed by wages not keeping pace with inflation.
 A woman walks by a "Now Hiring" sign outside a store in Arlington, Va., on Aug. 16, 2021. (Olivier Douliery/AFP via Getty Images)
A woman walks by a "Now Hiring" sign outside a store in Arlington, Va., on Aug. 16, 2021. (Olivier Douliery/AFP via Getty Images)

Recession fears have been paramount for the past several months. However, now that the United States has slipped into a technical recession—back-to-back negative gross domestic product (GDP) readings—workers might be trying to secure employment before the economic downturn amplifies, according to Bryce Doty, senior portfolio manager at Sit Investment Associates.

Although wages increased by 5.2 percent year-over-year in July to higher than $32 per hour, the rate is still behind the 9.1 percent growth in the consumer price index (CPI). With broad-based inflation entrenched in the post-pandemic economy and recession fears seeping into the marketplace, workers might be looking at the millions of employment opportunities to ensure they can survive a slowdown.

"And these job openings have been there for a long time. It’s not like the economy suddenly expanded and companies created new jobs," Doty said in an Aug. 5 note. "It feels more like people burned through pent-up savings and went, 'Oh crap! I gotta get a job!'"

The personal savings rate has been on a downward trend this year, falling to 5.1 percent in June from 5.8 percent, data from the Bureau of Economic Analysis show. Moreover, consumer credit surged by $40.15 billion in June, up from the upwardly revised $23.79 billion in May. Credit growth also has soared by 10.5 percent year-over-year.
According to the Bureau of Labor Statistics (BLS), job openings fell by 605,000 in June to 10.7 million—the lowest level since September 2021.

Cody Harker, head of data and insights at recruitment market agency Bayard Advertising, told The Epoch Times that data show a notable increase in jobseeker traffic.

"Job seekers, including those on the sidelines, may be looking to secure employment ahead of an economic slowdown; we’ve seen an increase in conversion rates from completed applications to hires by a staggering 24 percent over H1 of this year," he said. "This could also be influenced by the rise in employment among older workers, who are either reentering the workforce out of necessity or pushing off retirement to stay afloat during a potential recession."

Recent BLS data show that about 1.5 million would-be retirees have headed back to the office. The labor force participation rate for people aged 55 to 64 has returned to its pre-pandemic level.

Inflation and Productivity

Another notable development in the job market has been the immense jump in people who have taken on multiple jobs. The total number of multiple jobholders surpassed 7.5 million in July, up from roughly 7 million at the same time a year ago.

Since the labor market can't deliver the necessary wage gains to endure the current inflationary environment, employees are forced to accept lower pay, Peter Schiff, president and CEO of Euro Pacific Capital, told The Epoch Times.

"How's that a strong market?" Schiff asked. "A lot of people are being forced to take second jobs and third jobs because the job they have isn't enough."

Doty echoed this sentiment in his commentary, noting that "to workers, this is a recession."

Labor productivity has also become a growing concern in this economy.

Peter Boockvar, chief investment officer at Bleakley Advisory Group, noted on Aug. 5 that when hiring is as strong as it is amid a contracting GDP, it must mean that productivity is being decimated.

When output is sluggish and input is immense—unit labor costs advanced by nearly 13 percent in the January-to-March period—it suggests that business costs are growing and the bottom line could be hurting. When this occurs, it can lead to layoffs, experts say. But if companies are desperate for talent, profit margins of the past year may help cushion the blow.

Last week, preliminary nonfarm business sector labor productivity figures will be released, and experts are projecting a 4.6 percent decline in the second quarter. In the first quarter, productivity was down by 7.3 percent, the largest drop in quarterly output since the third quarter of 1947. Hours worked jumped by 5.4 percent, but output tumbled by 2.3 percent.

With GDP becoming more dependent on productivity growth, this could be a significant challenge for the nation, according to Edward Chancellor, an investment strategist and author.

“By aggressively pursuing an inflation target of 2 percent and constantly living in horror of even the mildest form of deflation, they not only gave us the ultra-low interest rates with their unintended consequences in terms of the 'Everything Bubble,' they also facilitated a misallocation of capital of epic proportions. They created an over-financialization of the economy and a rise in indebtedness. Putting all this together, they created and abetted an environment of low productivity growth," he recently told Mauldin Economics.

Layoffs Across America

The other aspect of the current labor market that has stumped economists is the growing number of layoffs and Americans filing for unemployment benefits.
In the week ending on July 30, initial jobless claims rose by 6,000 to 260,000, weekly Labor Department numbers show (pdf). Since April, the four-week average, which eliminates week-to-week volatility, has been climbing steadily.

U.S.-based firms announced plans to cut nearly 26,000 jobs from their payrolls in July, up by 36.3 percent year-over-year. This was the second-largest number of job cuts this year, according to Challenger, Gray and Christmas.

Data from, which tracks companies terminating their employees, show that 16,104 employees were laid off last month. In recent months, many of the largest companies in the United States have trimmed their payrolls, including Netflix, Amazon, Walmart, Ford, and Peloton.

The Fed is Watching

While the headline reading might dismiss the plethora of concerns about the labor market, economists and market analysts are digesting the extensive information.

Whether that will eventually lead to a slowdown in jobs remains to be seen, but the Federal Reserve will be paying close attention.

If current labor conditions are withstanding the central bank’s tightening cycle, financial markets are indicating that they believe they can afford the institution the opportunity to pull the trigger on a 100-basis-point rate increase at the September Federal Open Market Committee policy meeting.

Andrew Moran has been writing about business, economics, and finance for more than a decade. He is the author of "The War on Cash."
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