Utah’s unemployment rate saw only a slight increase, from 1.9% in April to 2% in May, but the chief economist for the Department of Labor Services Utah, Mark Knold, said the evidence for why that rate has increased is indeed worth noting. (Kristin Murphy, Deseret News)
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SALT LAKE CITY – Around this time last year, everyone’s favorite restaurants, bars, entertainment venues and everything in between began to emerge from a pandemic-induced dormancy and open their doors .
This type of resurgence can make it difficult to accurately compare economic indicators such as job growth, unemployment and employment rates between yesterday and today, the services department’s chief economist explained on Friday. of Utah Workforce, Mark Knold.
Over the past year, Utah’s job growth has remained above the national average, hitting 3.5% in May, while the unemployment rate is also in “lowest territory,” at only 2 %.
While Utah’s job growth is down from previous months – 4% growth in March and 3.8% growth in April. But Knold said that shouldn’t be a cause for great concern.
“Utah’s slowing growth rates throughout this year are only a reflection of a comparison to an economy that was waking up (and) growing aggressively a year ago,” said Knold.
While the state’s unemployment rate saw only a slight increase, from 1.9% in April to 2% in May, Knold said the evidence for why that rate rose — making it for the first time in two years – are indeed worth noting.
He said unemployment rates can rise for two reasons: people who lose their jobs and become unemployed or people “going off the sidelines” looking for work.
“This increase in job search will also increase the unemployment rate,” Knold said.
It may seem counter-intuitive that people trying to re-enter the labor force can lead to higher unemployment rates, but the Economic Policy Institute backed up Knold’s assertion, saying, “During an economic recovery, unemployment rates High unemployment may persist despite an increase in jobs as more workers begin to look for work and re-enter the workforce.
In the current environment, Knold said Utah workers aren’t losing their jobs, so it’s inactive workers returning to the workforce that are driving up Utah’s unemployment rate.
What compels previously inactive workers to start looking for work again? Knold said this can most likely be attributed to rising prices due to ongoing record inflation.
“Since February, Utah’s total workforce has increased by 25,800 and that exceeds the normal seasonal increases that always occur at this time of year with graduations,” he said.
Additionally, the labor force participation rate — the percentage of Utahns ages 16 and older who are looking for work — has grown rapidly since the pandemic.
“Just since February, it’s gone from 67.4% to 68% now in just three months,” Knold said. “It’s a rapid increase in the workforce in a short period of time.”
All of these factors combine to paint a picture of exactly why the unemployment rate is rising, even as more people have started looking for work.
“If someone doesn’t have a job and then decides to look for a job, their decision to look for a job brings them into the labor force,” Knold said. “Until they find a job, they will be counted in the unemployed part of the labor force and, therefore, they will increase the unemployment rate.”
He also said that Utahans and people in general are rational and make decisions about how they can support themselves, and with rising inflation, consumers are losing purchasing power.
“This can force former inactive workers to re-engage in the labor force and try to find employment, helping to maintain a household’s means,” Knold said.
He added that the May jobs report marks the first time Utah has been swayed by anything other than a strong post-pandemic recovery.
“There are emerging and significant economic forces rocking the United States economy and the first impacts of this turmoil may begin to be felt in Utah’s labor market,” Knold said.
The full job summary can be found here.
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