Analyzing an employment report may not be the highlight of ones day, but after reading the important points of one I realize just how useful and how much information can be extracted out by an experienced economist. The Business Week Online article The Great Jobs Machine Starts to Downshift deals with a wide variety of economic issues, ranging from job outlooks to unemployment reports to labor demand. My goal is to analyze and critique the issues in this article that are relevant to our class discussions. The beginning of the article, although confusing in wording, deals with the June employment report and how the Federal Reserve and others have reacted to it. The article then mentions that the unemployment rate is decreasing due to a slower job growth. If this slower job growth is due to a shortage of workers and not a decrease in labor demand, the article says that wages will continue to increase for workers. To further analyze this statement, supply and demand for labor must be used. A shortage of workers would be a decrease in the supply of labor (graph 1), which would decrease the quantity of labor but increase the wage at the same time. If the demand for labor has decreased and is the reason (graph 2), both the quantity and wages of workers would decrease, which is the worst scenario of the two. With this (hopefully) shortage of workers and increase in wages, an increase in spending in other markets would occur, bettering the economy in that respect.Later, the author states that service providers are adding jobs, but the service hiring is declining, due to the housing market making job cuts at real estate offices and mortgage lenders. This, as a result, causes wages in the finance, insurance, and real estate markets to drop off. As a further explanation, the wages in these fields have dropped because they are in effect complements with the housing market. Therefore, cuts in the housing market decrease the services th...
