Not Even Inflation Can Kill the Job Boom As inflation pounds the economy, some experts predict a rise in unemploymentbut that's not necessarily bad news for everyone. Even workers who have been laid off may have an advantage in a market where demand is still outrunning supply. Forbes Advisor informally surveyed a wide range of industry expertsfrom CEOs who are directly impacted by today's job market to economists and analystsfor their predictions on whether unemployment will rise in the fourth quarter of 2022. Sixty-three percent of those surveyed think unemployment will climb. The unemployment rate was 3.7% in August, among the lowest levels in two decades. "Inflation is hitting businesses due to higher input costs, energy costs, raw materials and supply chain barriers, which are adding burden on organizations," says Indu Tyagi, chief strategy officer at Market Research Future, a consumer market research company. "According to our predictions, unemployment may rise to 3.8% in the fourth quarter." But the labour market is so competitive that even a slight rise in unemployment isn't enough to hurt most workers, says Daniel Altman, chief economist at Instawork. "The labour market has been tight for so long," Altman says. "Companies may be afraid to lose the employees they've held on to." Why the Job Market Is Confusing The current job market is a strange brew of labour shortages, hiring, (some) firing and uncertainty about what's to come. And it's playing out amid implacable inflation and a series of rate hikes by the Federal Reserve. While some large companies like Goldman Sachs are expected to lay off hundreds of workers, industries like healthcare and durable goods manufacturing are struggling to find and retain skilled workers. Some experts cited the growing labour force as a potential cause for a rise in unemployment. As more people rejoin or enter the workforce for the first time, the unemployment rate could rise if jobs don't keep pace with workers. In August, when there were 315,000 more jobs than in July, unemployment increased, rising slightly from 3.5% in July to 3.7%. One reason is that 786,000 more people entered the labour force "I believe that trend [higher labour participation rate] will continue and nudge up unemployment numbers," says Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors. "In this case, higher unemployment can be seen as a good thing because it gives Federal Reserve Board Chair Jerome Powell a better chance of saving the economy by stemming wage inflation." Andrew Patterson, a senior international economist at Vanguard, takes the opposite view. Based on internal data, Patterson predicts that job growth will exceed labour force additions, pushing the unemployment rate down in the coming months. "We don't expect to see sustained increases in the unemployment rate until the first quarter of 2023, but we expect the magnitude of those increases to be modest," Patterson says. "We expect job openings to decrease through year-end, ending the year closer to 8 million and ultimately reaching 6 million by summer 2023." Workers Still Hold Most of the Power Anthony Reynolds, CEO at HireVue, is optimistic that even a shrinking economy can't compete with today's ultra-tight labour market. "There are two jobs for every person looking for work right now, and I don't see that changing abruptly unless something wholly unpredictable happens," Reynolds says. This means that employees have massive bargaining power today as the supply and demand balance is tipped in their favour. And the data indicate that employers have noticed and are doing more to attract and keep employees. The August Bureau of Labour Statistics employment report found that wages increased 5.2% over the last 12 months. This new power balance is something employers are not used to, Altman says. "The labour market was tilted in favour of employers for decades because of offshoring, deunionization, new technology, consolidation of companiesnow we're seeing some of that bargaining power return to employees," Altman says. Certainly, some of that power is showing up in the number of people who want to join unions and even those that just approve of them. Union representation petitions filed at the National Labour Relations Board (NLRB) jumped by 57% during the first six months of fiscal year 2022 compared to the same period prior (October through March). And 71% of Americans approve of labour unions, the highest level since 1965, according to a recent Gallup poll. "The pandemic led a lot of people to take stock of their lives and their livelihoods," Altman says. "Inperson hourly workers were under a lot of pressure during Covid, they took a lot of risk to work. To come out of it and feel like they were not fairly paid, unionization was a natural choice." In August, for the third consecutive month, the National Federation of Independent Business reported that nearly half of the business owners said they had job openings that were hard to fill

Michael Siers, an economist with the Maryland Department of Commerce, says this is the ideal time for people to get a job that aligns with their skills to maximize their earning potential. "Difficulty in finding workers is also leading to higher wages for new hires, making it more attractive than ever for workers to change jobs or re-enter the labour force," Siers says. He adds that this is also a good time to ensure your job contributions match your salary. the only way to compare your output to someone who's earning the same as you and to someone who is senior to you. If you feel you're being underpaid, this could be a good time to ask for a raise. However, some companies may not have the budget to pay more, which is when workers have to make the sometimes-difficult decision to look for another job. What Employers Are Doing About the Job Market Employers are in the precarious position of juggling today's demand with future economic ruts, like a recession. They're also staring down a labour shortage, causing some companies to retain workers they would otherwise terminate, given the current economic slowdown. "I think there may be some labour hoarding," says Elise Gould, a senior economist at the Economic Policy Institute. "Employers are holding on to workers because they had such a hard time rehiring, so they're thinking 'let's not move too quickly,' even if they expect weakness coming." Wage inflation is another issue both employers and the Fed must contend with as it tries to execute its "soft landing." Wage inflation simply means a rise in nominal pay. If employers have to pay higher wages, those increases are often transferred to the cost of goods and serviceswhich pushes prices up and contributes to overall inflation. Right now, we're in a snake-eating-its-tail situation as real wageswhich measures the purchasing power of the dollartrail inflation. Real average hourly earnings dropped by 2.8% over the 12-month period ending in August. Companies face pressure to pay higher wages, even as business stalls in some sectors. For example, manufacturing growth is at a two-year low, according to the latest S&P Global US Manufacturing PMI report. Dan North, a senior economist for global trade credit insurer Allianz Trade North America, says that inflation-induced rising wages will also slow job growth. "Employers will now hesitate a bit about making a job offer and instead will try to squeeze a little more productivity from the employees they already have...just look at Google," North says. On September 6, Google CEO Sundar Pichai said that he wants to improve Google's productivity efficiency by 20%, which involves slowing hiring and making better use of existing resources. Some interpreted his remarks as a warning sign that layoffs are imminent. While the tech industry has made headlines for laying off workers, it's not the only one that will feel the sting of rising rates. Gould says that the Fed's aggressive monetary policy will hit different industries harder and sooner because of their sensitivity to rate fluctuations

"Construction-commercial or housing construction, will take longer to slow down because those lead times are 5 to 6 months away," Gould says. "We'll see a faster drop-off on things that people might get a loan for because they're looking at much higher interest rates which are hitting their pockets now." If inflation continues to drill consumers and unemployment starts to rise, retail and travel will likely get slammed, given their reliance on consumer spending. Source: https://www.forbes.com/advisor/personal-finance/unemployment-forecast-fourth-quarter

Question 2

The article attributes increasing inflation rates to higher input costs and increasing energy costs. Propose the type of fiscal and/or monetary policies that may be implemented to control the increasing inflation levels.

#Please reference when giving assisting#