A MARTÍNEZ, HOST:
The Bureau of Labor Statistics came out with its report on the U.S. job market, and it looks weaker than forecasters had expected. Employers cut 23,000 jobs in July and job gains for May and June were revised sharply lower. NPR's Scott Horsley joins us now. Scott, what's happening to the job market?
SCOTT HORSLEY, BYLINE: Well, it wilted in the summer heat, A. Restaurants and retailers both cut thousands of jobs last month. Local government also cut a lot of jobs in public schools. We continue to see some modest hiring in factories and construction companies. And healthcare is still adding jobs, but even in healthcare, job gains are not as strong as they were earlier this year. As you say, a lot of analysts were caught off guard by this downbeat report, but it won't surprise a lot of ordinary workers. Daniel Zhao is chief economist at the job search website Glassdoor.
DANIEL ZHAO: We are increasingly hearing from workers that they're anxious about their job security. And they're frustrated by the fact that they are stuck in roles that are not necessarily good for them. And that's on top of workers who are not in a job right now and feel frozen out of the job market.
HORSLEY: Zhao says Glassdoor's worker confidence index had fallen to a record low even before this morning's report.
MARTÍNEZ: Yeah, and yet the unemployment rate is also really low. So what's that telling us?
HORSLEY: The unemployment rate is low. And it actually inched down a bit more in July, but not for the reasons we'd like to see. The jobless rate fell to 4.1% last month, but that was only because more than 260,000 people dropped out of the workforce. Now, it's true that employers are not laying people off in large numbers. But in most cases, workers aren't feeling confident enough to quit their jobs and go looking for better opportunities. So that means there just are not a lot of openings for people trying to get a foot in the door. More than a quarter of the people who were unemployed last month have been out of work for six months or more. And some would-be workers are getting discouraged and leaving the labor market altogether.
MARTÍNEZ: OK, so if the job market then is weakening, how is that going after people's paychecks?
HORSLEY: Yeah, employers don't have to boost wages as much these days in order to attract workers. For the 12 months ending in July, wages rose just 3.2%. That's a smaller annual increase than we were seeing earlier in the year. And, of course, we know prices have been going up faster than that. So Glassdoor's Zhao says workers' real buying power has been eroding.
ZHAO: Part of the reason that workers are feeling bad about today's job market is that even though wage growth is, you know, fairly stable, maybe it's come down a little bit, a lot of those wage gains have been eaten up by rising energy prices.
HORSLEY: Gasoline prices are still more than $1 a gallon higher than they were before the U.S. launched its war with Iran this spring. We did get a little break on gas prices in June, but then pump prices rebounded in July. So today's wage gains are not keeping pace with inflation.
MARTÍNEZ: You know, Scott, I'm thinking about the Federal Reserve. They're battling inflation and now has to deal with this softening job market. So what does this mean for the Fed?
HORSLEY: Yeah, it certainly makes the Fed's job more complicated. Ordinarily, the central bank's main tool for fighting inflation is to raise interest rates, but policymakers are going to be more cautious about doing that if it looks like the job market is on shaky ground. Before we got this jobs report this morning, investors had been leaning towards bets that the Fed would hike interest rates at their next policy meeting in September. That's looking less certain, though, after this downbeat jobs report.
MARTÍNEZ: That's NPR's Scott Horsley. Scott, thanks a lot.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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