Unemployment Is at Its Lowest Rate Since the Moon Landing. Here’s What That Means for You

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The Bureau of Labor Statistics released the data at the beginning of the month. 

1969 was a historic year for Americans: Buzz Aldrin and Neil Armstrong became the first men to land on the moon, Bryan Adams got his first real six string, and the nation’s unemployment rate sat at around 4.3%. Over 50 years later, we’ve once again hit that same benchmark. What economic lessons can we learn from the year when Elvis, The Beatles, and The Rolling Stones all topped the charts? Read on to find out.

The good news for workers

One of the most immediate effects of the strong labor market may have already begun to play out in your office. For the first time in years, workers have a lot of leverage over employers, thanks in part to the state of the economy.

Keeping good employees has gotten a lot harder for businesses in the last few years. Encouraged by a hot job market, workers who feel underpaid are more likely to take their chances and leave their current job. Following the Great Resignation, companies are raising wages at a rate not seen in a quarter of a century.

The hiring market can be a tough place for employers looking to replace lost employees. Recent estimates suggest that for every one unemployed person in the United States today, there exist two job openings. That may explain why the number of jobs offering a signing bonus has tripled over the last few years.

The state of inflation

For millions of Americans, the last few years have put a serious strain on their personal finances. Inflation has run rampant in almost every spending category, especially for the everyday needs of families. Unfortunately, a strong jobs report might also mean higher inflation.

The Federal Reserve, tasked with keeping inflation down and employment up, likely views the job report as a mixed signal. Inflation and unemployment often work as flip sides of the same coin. And a multi-trillion dollar economy is subject to momentum, so perfect balance is very difficult to achieve and maintain.

Specifically, a low unemployment rate means that more Americans are earning a steady income. This steady income may lead to increased consumer spending, putting additional inflationary pressure on the economy. In terms of Fed versus inflation, a strong job market may be another factor on the side of inflation.

Economic forecast

Since at least October, Treasury Secretary Janet Yellen has been downplaying the threat of a recession. Following the jobs report, Yellen doubled down on her earlier comments, saying “You don’t have a recession when you have 500,000 jobs and the lowest unemployment rate in 50 years.”

Beyond Yellen’s comments, it can be very difficult to forecast how low unemployment affects the prospects of the economy. While some economists believe that low unemployment is the beginning of an economic recovery, others argue that it could make a future recession worse. Looking back to 1969, low unemployment was shortly followed by a recession, but one that was so mild some economists don’t count it as a recession at all.

So, is the recent jobs report a good sign or a bad one? It depends. On one hand, a hot job market could give workers the upper hand in employment negotiations. On the other hand, more workers means more money in circulation, which could make inflation worse. And while the Treasury secretary is assuring the American people that the report is a good sign for the economy, only time will tell.

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