This labor data trend is a "red flag," economist explains.

This labor data trend is a "red flag," economist explains.
This labor data trend is a "red flag," economist explains.
  • An economist stated that the number of marginally attached workers increased by an average of 247,000 per month over the past three months.
  • Here's what other economists suggest as a warning sign for the U.S. labor market.

In July, the unemployment rate increased, causing concern among some economists due to a specific detail in the data.

According to the Bureau of Labor Statistics, "marginally attached workers" are individuals who are ready to work and desire employment but have not searched for a job in the past four weeks.

Those in that category face the risk of becoming "disconnected workers," who leave the labor force entirely due to low wages or intense competition.

According to an analysis from Alí Bustamante, a labor economist and director of the Worker Power and Economic Security program at the Roosevelt Institute, a liberal think tank based in New York City, the segment of marginally attached workers grew by a monthly average of 247,000 during the past three months. Bustamante assessed marginally attached workers plus unemployed workers as a group, which the BLS refers to as U-6.

He stated that it was a warning sign for the labor market.

Wedding planning is a great opportunity to save money, according to an expert.

An increase in marginally attached workers indicates a negative outlook for the U.S. labor market, according to Nick Bunker, economic research director for North America at Indeed Hiring Lab. This suggests that while people are actively seeking employment, they are struggling to find jobs.

A 'new phase' for the job market

It is uncertain whether the marginally attached worker labor segment will continue to expand at such a rapid pace, according to experts.

Bunker stated that a sustained increase in marginally attached workers is concerning, but he doesn't see it happening currently.

Teresa Ghilarducci, a labor economist and professor of economics at The New School for Social Research, stated that this category will be closely examined for the upcoming month.

Ghilarducci, who is the director of the Schwartz Center for Economic Policy Analysis and The New School's Retirement Equity lab, said that the jump in the job market could also reflect a correction after much-stronger-than-expected job reports in the last three months.

As more people search for jobs and competition intensifies for open positions, job growth is slowing down, indicating a possible shift in the market, Bustamante stated.

"Bustamante stated that while the U.S. labor market is still robust, workers are currently facing more competition for open positions than in the previous year. As a result, incumbent workers are switching jobs less frequently, and new entrants to the labor force are experiencing longer job search durations."

by Ana Teresa Solá

Investing