Jobs data could signal shortage of qualified workers to hire
Are employers starting to run out of workers to hire?
A hiring pullback reported in Friday’s U.S. jobs data for May raises that prospect. The economy added just 138,000 jobs, which was still high enough to help cut the unemployment rate to a 16-year low of 4.3 percent. With the recovery from the Great Recession having reached its eighth year, hiring is gradually weakening.
“It’s definitely becoming an increasing problem for businesses — finding qualified workers,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “The pool has diminished considerably.”
Not only did employers slow their hiring during May. The government also revised downward its estimate of job growth in March and April by a combined 66,000. Monthly gains have averaged 121,000 the past three months, compared with 181,000 over the past 12 months. As recently as 2015, job growth averaged 226,000 a month.
Companies now are choosing from among a smaller pool of applicants, especially for those who have the education or skills they need.
“Given reports that job openings are near all-time highs, it suggests that businesses are struggling to fill these positions,” said Beth Ann Bovino, U.S. chief economist for S&P Global Ratings.
For now, most analysts think job growth remains solid enough for the Federal Reserve to feel confident about raising interest rates again when it meets in two weeks.
One unusual characteristic of
today’s job market is that the unemployment rate keeps falling even as hiring has slowed. Economists say the main reason is that the proportion of adults who either have a job or are looking for one has remained unusually low. Once people stop looking for a job, they’re no longer counted as unemployed.
Contributing to the trend has been the continuing retirements of America’s vast generation of baby boomers. In addition, companies are increasingly seeking workers with college degrees or specialized know-how — construction experience, for example, or a background in machine automation. As they do, the less-qualified are finding it harder to land work, and some have grown discouraged and given up their searches.
“After the recession, we saw employers hire people with higher levels of qualifications, and it seems like that habit has stuck through the recovery,” said Cathy Barrera, chief economic adviser at the jobs firm ZipRecruiter.
Historically, declining unemployment tends to lead to strong pay raises. So far, that hasn’t happened broadly across the economy. Average hourly earnings have risen 2.5 percent over the past year.