The dust is starting to settle from the global stock market sell-off Monday. One development that helped spark fear among investors was the increase in the U.S. unemployment rate, which ticked up to 4.3% in July from 4.1% in June. A rising jobless rate is not, on the face of it, usually a good thing. But this time, the reasons might not be so bad.
Another reason, though not the main reason, more people are looking for work is that some are new immigrants, and that’s not a bad reason, said Nixon of Northern Trust.
“They have filled a really important gap for us, and that’s allowed labor inflation to fall,” Nixon said.
It’s helped ease worker shortages, which is different from bidding down wages by competing against U.S. workers, said Wharton professor Zeke Hernandez, author of “The Truth About Immigration: Why Successful Societies Welcome Newcomers.”
“When businesses don’t have enough people to hire, that is, there’s not enough labor supply, they have to pay higher wages, and they pass on those wage increases to customers,” Hernandez said.
So, if the unemployment rate had to go up, immigration and higher wages aren’t the worst reasons.
