Unemployment Rate Falls To 3.5%—But Job Quality Is Deteriorating—As Fed Works To Fight Inflation

The unemployment rate unexpectedly fell, and the labor market added back more jobs than expected in December, but economists note the quality of jobs available to Americans is deteriorating as major employers start to slash costs—slowing down wage growth that has been fueling inflation in a positive sign for the Federal Reserve’s campaign to tame rising prices.

Total employment increased by 223,000 in December—better than the 200,000 new jobs economists were expecting, according to data released Friday by the Labor Department.

Despite waves of corporations slashing their workforce, the unemployment rate fell to 3.5%—coming...