Despite the overall slowing of job growth within the United States, the labor market remained steady this past May, according to an economic news release from the U.S. Bureau of Labor Statistics. The department noted that 139,000 jobs were added to the market while the country’s unemployment rate stayed at 4.2 percent for the third month in a row.
While these numbers are higher than expected amidst tariff uncertainty, Bryant Economics Professor Jongsung Kim, Ph.D., who specializes in labor economics, notes that government officials should focus on developing additional policies to assist those who’ve experienced — and may still experience — job displacement due to tariffs.
Tariffs reap benefits, such as supporting domestic industries, notes Kim, but negative outcomes can occur as well. For instance, producing items within the U.S. will be more costly since the country has higher minimum wage requirements, which could result in a company choosing to pass the cost along to the consumer or let go of employees to off-set the additional expenses.
“Say an employer has to make a decision between you and me. If you’re a more skilled worker, then you’ll keep your position,” says Kim. “The weakest link gets broken first.”
Policy initiatives could include temporary cash assistance or retraining so individuals can contribute to the labor market in new, in-demand ways. In the time of automation and artificial intelligence, Kim explains that the gap between skilled workers and unskilled workers is widening — adding to income inequality.
“When you look at the distribution between the top 5 percent and bottom 10 percent, the growing gap is becoming more prevalent,” Kim says.
Another focus could be on educational opportunities, so individuals have a greater understanding of financial assets to better navigate their economic position and seek potential monetary opportunities.
He notes that affluent individuals have greater means to protect their economic position, including strategies for diversifying their risk — whether it be through buying bonds or investing in real estate. They also know about financial market dynamics and its ups and downs. Those with less money and experience who have invested in the stock market may panic when stocks go down — prompting their decision to pull money from the market.
Emphasizing that it’s too early to predict the short-term and long-term impacts of tariffs on the job market, Kim shares that some people may immediately feel the impacts from tariffs while others may feel the impact later. When people feel the impact, this can cause a lot of anxiety and anxiety can lead to uncertainty, which is the worst enemy for economic growth, explains Kim.
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“The most important public policy is mitigating unnecessary uncertainty,” Kim says, adding how supply chains and industries have, and will, continue to be disrupted by tariffs.
Ultimately, says Kim, people tend to believe that the tariff conversation is an economic matter, but politics is really the key driver. In this current political climate, the United States has been the dominant power and has driven global hegemony since the end of World War II; however, today, it feels its power is threatened.
“Life itself is uncertain, so we cannot eliminate the uncertainty completely, but policy should be based on sound economic foundation and evidence. So, if this tariff policy was implemented to help U.S. consumers and U.S. individuals, we have to see some kind of evidence in order to sustain these tariffs,” Kim says.
