By Eric Morath and Lauren Weber - Friday, March 1, 2019
The job market doesn’t get much better than this. The U.S. economy has added jobs for 100 consecutive months. Unemployment recently touched its lowest level in 49 years. Workers are so scarce that, in many parts of the country, low-skill jobs are being handed out to pretty much anyone willing to take them—and high-skilled workers are in even shorter supply.
All sorts of people who have previously had trouble landing a job are now finding work. Racial minorities, those with less education and people working in the lowest-paying jobs are getting bigger pay raises and, in many cases, experiencing the lowest unemployment rate ever recorded for their groups. They are joining manufacturing workers, women in their prime working years, Americans with disabilities and those with criminal records, among others, in finding improved job prospects after years of disappointment.
There are still fault lines. Jobs are still scarce for people living in rural areas of the country. Regions that rely on industries like coal mining or textiles are still struggling. And the tight labor market of the moment may be masking some fundamental shifts in the way we work that will hurt the job prospects of many people later on, especially those who lack advanced degrees and skills.
But for now, at least, many U.S. workers are catching up after years of slow growth and underwhelming wage gains.
One face of the red-hot job market is Cassandra Eaton, 23, a high-school graduate who was making $8.25 an hour at a daycare center near Biloxi, Miss., just a few months ago. Now she earns $19.80 an hour as an apprentice at a Huntington Ingalls Industries Inc. shipyard in nearby Pascagoula, where she is learning to weld warships.
The unemployment rate in Mississippi, where Huntington employs 11,500 people, has been below 5% since September 2017. Prior to that month, the rate had never been below 5% on records dating back to the mid-1970s. In other parts of the country, the rate is even lower. In Iowa and New Hampshire, the December jobless rate was 2.4%, tied for the lowest in the country. That’s helped shift power toward job seekers and caused employers to expand their job searches and become more willing to train applicants that don’t meet all qualifications.
“It’s amazing that I’m getting paid almost $20 an hour to learn how to weld,” says Ms. Eaton, the single mother of a young daughter. When she finishes the two-year apprenticeship, her wage will rise to more than $27 per hour.
It’s no surprise to economists that many people who were previously left behind are now able to catch up. It’s something policymakers have been working toward for years. Obama administration economists debated how to sustain an unemployment below 5%. Now Trump administration officials are considering how to pull those not looking for jobs back into the labor force.
“If you can hold unemployment at a low level for a long time there are substantial benefits,” Janet Yellen, the former chairwoman of the Federal Reserve, said in an interview. “Real wage growth will be faster in a tight labor market. So disadvantaged workers gain on the employment and the wage side, and to my mind, that’s clearly a good thing.”
This was one of Ms. Yellen’s hopes when she was running the Fed from 2014 to 2018; keep interest rates low and let the economy run strong enough to keep driving hiring. In the process, the theory went, disadvantaged workers could be drawn from the fringes of the economy. With luck, inflation wouldn’t take off in the process. Her successor, Jerome Powell, has generally followed the strategy, moving cautiously on rates.
“This is a good time to be patient,” Mr. Powell told members of Congress Tuesday.
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