Dr Jeff Cornwall

There is good news and bad news about this week’s unemployment report.
The good news: Unemployment is down.
October’s unemployment rate of 4.4% is the lowest in five years. 92,000 new payroll jobs were created. This is actually an under-count, as self-employed and new entrepreneurs are not counted in these figures. They are now 50% of the economy.
The bad news: Unemployment is down.
There are two concerns with this report. One is that the inflation worry is still out there, and tight labor markets could cause a sustained and difficult to manage pressure on prices. The second concern is that small businesses, which employ half of America’s workforce, are having a difficult time hiring.
The National Federation of Independent Business’ Chief Economist William Dunkelberg responded to the unemployment report with this statement:

An historically high 63.3 percent of the adult population has a job (higher only in the dot.com-Y2K years) and the unemployment rate is 4.4 percent in October. This does not sound like a labor market with deficient labor demand, but it’s showing clear signs of a mismatch between supply and demand, with clear shortages of qualified workers.
Job creation plans were also exceptionally strong, even though owners see the economy slowing down. Apparently there is a real hiring deficit in the small-business sector. Even with lower expected sales growth, more workers are desired, if they are qualified.
Labor markets continue to tighten. More and more small-business owners have been paying higher compensation, and the labor force participation rate indicates that labor supply has responded, though not sufficiently to keep the unemployment rate from falling.