Unemployment’s Steady Fall Could Signal Trouble—or a Broader Structural Shift
Jobless rate has been below the ‘natural’ level for four months now, with no obvious sign of inflation
Structural changes in the economy could alter this theoretical natural rate, meaning the jobless rate might have room to go lower without throwing the economy off balance. One reason is the aging workforce. Jobless rates tend to be lower for older workers, who are better trained than younger workers and tend to be more settled in their jobs. With a large portion of the workforce in older age groups, it might be the case that the economy can handle a lower jobless rate.
.. Globalization might help drive unemployment down at home without affecting broader inflation trends. U.S. workers now compete with workers from around the world. An abundance of low-wage workers in China and other developing economies could hold down wages and prices in the U.S. in ways that didn’t happen a decade or two ago. Likewise, technology could be reshaping the interplay of unemployment and inflation: Amazon.com Inc., the internet retailing giant that uses advanced robotics to manage sophisticated warehouse planning, plans major price cuts at Whole Foods Markets Inc., which it recently purchased.