April Jobs Report Shows Lowest US Unemployment in 50 Years

April Jobs Report Shows Lowest US Unemployment in 50 Years

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”:

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State and Local Minimum Wage Hikes Continue This Year Throughout the US

State and Local Minimum Wage Hikes Continue This Year Throughout the US

A consistent trend in the US business environment over the past three years has been a shift from federal to state and local governments as the main source of regulatory pressure on employers. Even as federal regulations stall or are rolled back under the Trump administration, businesses are facing higher minimum wages, paid leave mandates, and other new regulations at the state and local level. This trend has continued so far in 2019. While the new Democratic majority in the House of Representatives plans to push for an increase in the federal minimum wage from $7.25 to (eventually) $15 an hour, their intent is largely to put political pressure on Republicans with regard to labor issues, and the effort is unlikely to bear much fruit as long as Republicans control the Senate and the White House.

Meanwhile, however, the patchwork of state and local wage floors is rising and growing more complex. Minimum wages are going up this year in at least 22 US states plus Washington, DC, as well as a number of cities and counties. Most of these increases reflect automatic increases or inflation indexing built into the states’ minimum wage laws, while a few are the result of legislation or referenda passed last year.

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US Job Growth Slowed in February, but Average Earnings Rose

US Job Growth Slowed in February, but Average Earnings Rose

The US economy added only 20,000 jobs last month, according to the Labor Department’s latest jobs report, marking a sharp slowdown from a streak of monthly gains in the hundreds of thousands. The unemployment rate, however, fell from 4.0 to 3.8 percent, while the number of people employed part time for economic reasons decreased by 837,000 to 4.3 million, following a sharp increase in January attributed to the federal government shutdown that month. The return of furloughed federal employees also contributed to the decline in the overall unemployment rate.

The number of new jobs fell far short of economists’ predictions, which were in the range of 170,000-180,000. Employment in fields like professional services and health care continued to increase apace with recent trends, but the construction sector cut 31,000 jobs and manufacturing added only 4,000. Employment in other industries like retail, leisure, and hospitality stagnated.

The contrast with other recent months is even more striking as the numbers of new jobs created in December and January were both revised upward slightly, to 227,000 and 311,000 respectively. This sudden swing from robust to lackluster job growth is difficult to interpret as it may signal a slowdown be just a blip in the data, the New York Times notes:

January’s payroll gains were exhilarating. February’s numbers were disappointing. Together they offer a potent reminder that each monthly employment report from the Labor Department captures just a moment in time. Longer-term trends are what matter, and the streak of job growth continues to set records. …

Still, as Carl Tannenbaum, chief economist of Northern Trust in Chicago, said: “This is a disappointing report. I don’t think there’s any way to sugarcoat it.” Rising wage growth is good for workers, but combined with soft payroll growth, he said, “it’s a signal we need to be cautious with the U.S. economic outlook.”

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In Construction Worker Shortage, US Cities See Opportunity for Struggling Residents

In Construction Worker Shortage, US Cities See Opportunity for Struggling Residents

With the tightest labor market in decades, US employers in most industries are having a hard time filling roles. One sector that is especially hurting for workers is construction, where the labor shortage coincides with growing demand for housing and commercial development in American cities large and small. There’s a lot of work to be done, but not enough people to do it.

At the same time as unemployment is historically low, however, many Americans are underemployed, not looking for work, or lacking in marketable job skills. Some cities are now looking at the construction worker shortage as a chance to help improve the skills, incomes, and employability of underserved populations. The New York Times took a look at what these cities are doing in a recent feature:

Facing a tight labor pool, developers, public officials and community organizations are using commercial projects to provide residents with careers in construction. Together, they’re making an effort to recruit men and women from impoverished neighborhoods or challenged populations, such as former prison inmates. In booming markets like San Francisco, Denver and Miami, where gentrification is squeezing affordable housing, demand for these types of programs is growing.

The training programs are also occurring in smaller markets. In Milwaukee, for example, Gorman & Company, an apartment developer, has teamed up with city, state and community agencies to give former inmates on-the-job training restoring dilapidated, tax-foreclosed homes, which are then rented to low-income earners.

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New Studies Challenge Conventional Wisdom on Gig Economy, Skills Gap

New Studies Challenge Conventional Wisdom on Gig Economy, Skills Gap

Over the past decade, particularly in the US, there has been considerable debate over whether the labor market trends we were seeing represented fundamental shifts in the economy or business-cycle responses to the Great Recession that followed the 2008 financial crisis and the long, slow recovery. In new studies, two of these trends—the skills gap and the gig economy—are reconsidered in light of new data, with researchers finding that phenomena they once thought were secular may actually have just been products of the recession after all.

Economists Alan Krueger and Lawrence Katz made headlines in 2016 when they released the results of a survey they had conducted the year before, which found a major jump in the number of Americans making a living in “alternative work” arrangements (i.e., not in regular, full-time employment), though gig economy platforms like Uber made up a small fraction of this contingent labor market. At the time, Krueger and Katz found that around 16 percent of the American workforce were engaged in this type of work, compared to 10 percent in 2005. Follow-up work indicated that alternative work accounted for almost all of the jobs created since 2005.

Now, the leading economists of the gig economy say their initial study overestimated its impact, the Wall Street Journal reported this week. In a new paper, Krueger and Katz look at new evidence and conclude that their 2015 survey overstated the size of the contingent workforce because of a weak labor market and the impact of the recession. Many of the alternative jobs they counted were stopgap jobs people took to make ends meet while they were unable to find full-time work. Once the economy and their job prospects improved, these gig workers returned to more traditional employment. The vast difference in the health of the US economy between 2005 and 2015 skewed the data.

Accordingly, the economists now revise their estimate of the growth of alternative work during that period to a 1 or 2 percentage-point increase, not 5. This brings their findings more in line with other recent studies that have painted more modest pictures of the gig economy—including the Bureau of Labor Statistics’ 2017 Contingent Worker Supplement survey, which claimed the alternative workforce had actually shrunk since the last time the survey was conducted in 2005. At the same time, Krueger and Katz argue in their new paper that the surveys used to measure alternative work arrangements, including those conducted by the Labor Department, are seriously flawed (the huge gap in the BLS data due to the dozen years when the survey wasn’t conducted is part of the problem).

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US Job Market Finishes 2018 Strong, but Talent Challenges Remain

US Job Market Finishes 2018 Strong, but Talent Challenges Remain

The US jobs numbers for December, released by the Bureau of Labor Statistics on Friday, exceeded expectations by a wide margin with the economy adding 312,000 jobs last month, while figures from October and November were revised upward by a combined total of 58,000. It was the best month of job growth since February 2018, when 324,000 jobs were created. Economists surveyed by Dow Jones had forecast just around 176,000 new jobs, according to CNBC.

The unemployment rate increased slightly from 3.7 to 3.9 percent in December, but for a good reason: not because workers lost their jobs, but rather because 419,000 new job seekers entered the labor force. The unemployment rate has fallen from 4.1 percent since December 2017, while the workforce expanded by nearly 2.6 million people. With the final report for the year, the US added an average of 220,000 jobs a month in 2018. Wages also grew in December by 0.4 percent over the previous month and 3.2 percent over the previous year, tying with October for the best year-over-year increase since April 2009 and indicating that the tight labor market is finally leading to higher pay for US employees.

“It appears that higher wages are the reason why people are returning to the active labor force in large numbers,” Paul Ashworth, chief US Economist with Capital Economics, commented to CNN, adding that wage growth might spook investors by suggesting that the Federal Reserve would proceed with its planned schedule of interest rate hikes this year. Ashworth added in a note reported by CNBC that the big jump in jobs “would seem to make a mockery of market fears of an impending recession,” while Jim Baird, chief investment officer for Plante Moran Financial Advisors, told the network: “Employers, it would seem, didn’t get the memo from Mr. Market that it’s time to tighten their belts.”

Nonetheless, the robust jobs report comes amid market jitters over the possibility of an overheated economy, missed earnings projections from some major US companies, and concerns about the domestic impact of President Donald Trump’s trade policies toward China. In remarks after the report was released on Friday, Fed Chairman Jerome Powell said the central bank was prepared to adjust monetary policy in response to changing economic conditions, meaning it could ease up on raising interest rates if the economy shows signs of trouble. Powell described the jobs report as encouraging, saying the rise in wages “does not raise concerns about too-high inflation” and would not prompt the Fed to accelerate rate increases, the New York Times reported.

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For Retailers, Attracting Holiday Staff Means More than Just Raising Pay

For Retailers, Attracting Holiday Staff Means More than Just Raising Pay

Facing one of the tightest labor markets in living memory, US retailers and other companies staffing up for the holiday season have had to get creative about finding and attracting the extra workers they need for the seasonal rush. Some retail chains started hiring for the winter holidays all the way back in the early summer, raised entry-level wages for store employees, and offered a variety of bonuses and perks like store discounts.

The retail sector was already feeling pressure to bump up pay, the Star-Tribune reported this week, citing a survey by the hiring platform Snag that found retailers expected wages to rise by 54 percent this year. That’s partly a product of a labor shortage, but also reflects the growth of online shopping:

As more shoppers order online and opt to have items shipped to the store or their front door, retailers’ backroom operations are changing. Mass merchants still need cashiers, salespeople and shelf stockers. But they need more people to package orders for store pickup and to work in warehouses and distribution centers, which increasingly requires more technology skills.

Target is doubling the number of staff it needs to handle digital orders. Macy’s, which is hiring about the same number as last year, will shift its mix and add 5,500 more people for its fulfillment centers. Best Buy says it, too, will bulk up on workers to package up online orders.

Labor market competition, the need to attract and retain more skilled employees, and “HR-as-PR” considerations are all coming to bear on retailers’ decisions to raise pay for their hourly employees. They are also courting hires with new benefits, including intangible benefits like flexibility, Steve Bates notes at SHRM:

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