Millions of people have joined the labor force in the past year

More than 164 million people in this economy are working or would like to work — about 62.3% of the civilian population. It’s the heart of our economy, and it grew very slightly, by about 300,000 people, in May. And that’s a bit of good news.

Compared to May last year, however, around 3.5 million more people were working or looking for work.

“That means they’re encouraged by the prospects of finding jobs, and they’re looking for those jobs and they’re finding those jobs — and that’s generally really good news for the economy,” said Kathy Jones of the Charles Schwab Center. . for Financial Research. (Schwab is a Marketplace Underwriter.)

Black workers between the ages of 25 and 54 have made significant gains, she said. “The participation rate for black prime-age workers was 81.2%. This is the highest since 2005.

And the participation rate for women rose from 56.7% to 57% in May. Jones said women were responsible for much of last year’s increase. Yet, before the pandemic, women’s participation in the labor market was growing rapidly, and they have yet to return to that level. Neither do men on the whole.

“Right now everyone is looking at the labor force participation rate because they’re like, ‘What does a full recovery in the US economy look like? ‘” said Betsey Stevenson, professor of economics at the University of Michigan.

Will we have as many people working? Will we make as much money or provide as many goods and services? What is the new normal? Another reason economists are watching the labor force participation rate is that if it continues to rise, it would leave some pressure on the labor market and dampen wage growth.

“It would help relieve inflationary pressures because there won’t be this supercharging of demand for goods and services,” said Kenneth Kim, senior economist at KPMG.

But as the pandemic recovery rumbles and more people enter the workforce, a warning courtesy of Betsey Stevenson: “The more vulnerable populations, the people who tend to earn less, tend to be pushed back to the final stages of recovery. If a recovery ends too quickly, those people just don’t get brought back. »

As the Federal Reserve raises interest rates and tries to cool the economy to fight inflation, the window for people to come back may start to close.

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