The latest jobs numbers from the US Department of Labor, released on Friday, show that the US economy continues to create jobs at a robust pace despite historically low levels of unemployment. According to the April report from the Bureau of Labor Statistics, 263,000 jobs were created last month, overshooting analysts’ predictions in the range of 185,000-190,000. The unemployment rate fell to 3.6 percent, a level not seen in the US since December 1969.
Wages also rose, albeit more modestly than economists would expect to see in such a tight labor market: Average hourly earnings were up 0.2 percent month-to-month for a 3.2 percent increase over the last 12 months. While this was nearly the best year-over-year growth figure since the end of the Great Recession in 2009, it doesn’t make up for years of stagnation, while inflation wiped out a significant portion of those gains, Vox highlighted in its coverage of the jobs report:
The latest pay data suggests that workers and labor unions will continue to strike to force businesses to boost wages. Slow income growth has been the weakest part of the US economy in its recovery from the Great Recession. Wages have barely kept up with the cost of living, even as the unemployment rate dropped and the economy expanded. April’s 6-cent average hourly wage hike suggests more of the same, despite a surprising 10-cent jump in February.
Over the past year, the cost of food and housing has gone up, so paychecks have had to stretch further. But because of recent falling gas prices, the annual inflation rate has fallen to 1.9 percent, compared to a high of 2.4 percent in 2018 (based on the Consumer Price Index). So when you take inflation into account, workers’ real wages only grew about 1.3 percent within the past year.
There are also reasons to hesitate before celebrating the decline in the unemployment rate, the New York Times pointed out, noting that “the factors behind it aren’t as hopeful as the headline number itself”:
There was a big drop in the number of people who said they were looking for work. The labor-force participation rate, which measures the share of people 16 and older who are employed or seeking a job, fell to 62.8 percent, from 63 percent in March. “The drop in the unemployment rate was encouraging, but it was for bad reasons,” said Michelle Meyer, head of United States economics at Bank of America Merrill Lynch. “The lower participation rate is a little bit of a disappointment but it’s a volatile number.”
One-time factors may have stimulated hiring in some parts of the economy. Gregory Daco, chief United States economist at Oxford Economics, noted that the 34,000 increase in leisure and hospitality jobs might suggest that restaurants and hotels were staffing up earlier in the month for Easter, which fell late in the month.
In comments to the Wall Street Journal, Marianne Wanamaker, a labor economist at the University of Tennessee, also highlighted the historically high 7.3 percent of adults who were underemployed, too discouraged to look for work, or otherwise marginally attached to the labor force last month This rate, a broader measure of unemployment, is slightly higher than it was in 2000, when the overall unemployment number was higher. In previous business cycles, an unemployment rate this low caused that number to fall (and wages to rise) significantly, but that hasn’t happened.
This suggests that there is still more slack in the labor market than the headline unemployment number would suggest. That in turn supports the Federal Reserve’s decision last Wednesday not to change interest rates and to signal no plans to adjust monetary policy in the near future, Reuters added. While the BLS data allays fears of an economic slowdown, Reuters pointed to other new surveys from the Institute for Supply Management that suggest service sector and manufacturing activity slowed last month, so the good economic news is not guaranteed to continue.
Overall, however, last Friday’s report was good news for many workers in the US. SHRM’s Roy Maurer highlighted the broad demographic impact of April’s job gains:
The joblessness rate fell across nearly all demographic categories, including men (3.4 percent); Asians (2.2 percent); those with only a high school degree (3.5 percent); people with disabilities (6.3 percent); and veterans (2.3 percent). Unemployment declined for Hispanics (4.2 percent) to the lowest point since 1973 and for women (3.1 percent) since 1953. Unemployment for blacks showed little change at 6.7 percent.
“The tight labor market has created more opportunities for women, even in sectors traditionally dominated by men, such as transportation, construction, police and security, which, along with other protective service jobs, has seen women’s participation grow more than 40 percent since 2000,” said Rebecca Henderson, CEO of Randstad Sourceright, a global talent acquisition, consulting and outsourcing firm. “In this job market, employers are giving female workers a chance they would not have otherwise, which could eventually facilitate more long-term gender balance, both in what are viewed as traditionally male roles and in the overall workplace.”
For employers, of course, the numbers read differently, underscoring the persistent pain point of filling talent gaps in a tight labor market. “Hiring remains strong,” Reuters reported, “despite anecdotal evidence of worker shortages in the transportation, manufacturing and construction industries, suggesting there is still some spare capacity in the labor market.” Finding that spare capacity, however, is a major challenge for US recruiters, especially with demand for talent converging on a small number of specialized roles: The latest findings from Gartner TalentNeuron™ show that 49 percent of all job postings by S&P 100 companies in 2018 were for just 39 roles, while the remaining 51 percent were for 872 other roles. These high-demand roles include customer service representatives, managers, and skilled tech roles like software developers and computer system engineers.