NEW YORK ( MainStreet) -- When the Bureau of Labor Statistics announced Friday that the unemployment rate had dropped to 8.3% after the economy added nearly 250,000 jobs in January, the message seemed clear: The U.S. is hiring again. Not only did this shatter hiring expectations, but it represented the fifth consecutive month that the unemployment rate had declined. While that certainly sounds like good news for the millions of Americans looking for work, economists say it could also cause some of those who gave up on their job hunts in recent years to come back and resume their search, which would effectively make the labor market that much more competitive.
The January jobs report was good, but it's likely to mean competition for positions will get even more fierce.
"There's no question that more people will be entering the labor force," says Mark Price, a labor economist with the Keystone Research Center, noting that it's necessary for more workers to re-enter the job market for the economy to get healthier. "But it's absolutely correct to worry. From the perspective of someone looking for work, there is a good chance that there will be extra bodies out there looking too." Price and other economists who spoke with us do not expect there to be an influx of workers overnight, but rather gradually throughout the course of the next six months or so if the positive jobs numbers continue. As Price points out, though, even that trickle of extra workers could pose a threat to current job hunters given that there are still more than four unemployed workers for every job opening. >>8 Shortcuts to Getting Richer To complicate matters further, baseline improvements in the jobless rate from month to month may overstate the actual pace of improvement in the labor market. Yes, unemployment is now at a three-year low, but some of that is due to the many Americans who either stopped looking for work altogether or accepted part-time employment out of desperation, since neither group is counted among the unemployed. The underemployment rate, which does factor in part-time workers, is stuck above 15% and the overall percentage of the population that is employed, which factors in those who gave up, remains more than four percentage points below where it stood just before the recession.