Healthy job mar­ket stays strong with record open­ings

Com­pa­nies in Oc­to­ber add most list­ings in eight months

The Mercury News Weekend - - DATA - By Christo­pher Rugaber The As­so­ci­ated Press

WASH­ING­TON » Against the back­drop of next week’s midterm elec­tions, the U.S. job mar­ket is the health­i­est it’s been in at least two decades. And with an­other strong hir­ing re­port ex­pected Fri­day, some barom­e­ters of the job mar­ket sug­gest that it has room to strengthen fur­ther.

Busi­nesses, hun­gry for work­ers, are ad­ver­tis­ing a record num­ber of open­ings. Com­pa­nies in Oc­to­ber added the most jobs in eight months, a pri­vate sur­vey found. Pay has been pick­ing up.

In the past year or so, as un­em­ploy­ment has dwin­dled to a now- 49-year low, econ­o­mists had been pre­dict­ing that hir­ing would slow as the pool of job­less work­ers shrank. Yet so far that hasn’t hap­pened. In fact, job growth has ac­tu­ally ac­cel­er­ated this year from 2017.

And though some in­dus­tries have com­plained of a lack of qual­i­fied ap­pli­cants, other signs point to a pool of read­ily avail­able work­ers, in­clud­ing the num­ber of part-time work­ers who would pre­fer full-time jobs.

“It doesn’t seem to me that we’re any­where near the point where, oh my God, we can’t find peo­ple,” said Joseph LaVorgna, chief econ­o­mist for the Amer­i­cas at Natixis, an as­set­man­age­ment com­pany.

So far in 2018, em­ploy- ers have added a ro­bust av­er­age of 208,000 jobs a month. That’s stronger than last year’s av­er­age of 182,000, though not quite at the siz­zling pace of roughly 250,000 in 2015. Com­bined, all that hir­ing has been enough to cut the job­less rate to 3.7 per­cent, the low­est level since 1969.

Econ­o­mists have fore­cast that the Oc­to­ber jobs re­port be­ing re­leased Fri­day — the fi­nal snap­shot of the la­bor mar­ket be­fore Elec­tion Day — will show that a solid 190,000 jobs were added and that un­em­ploy­ment was un­changed. Polls have sug­gested that while Amer­i­cans gen­er­ally ap­prove of the econ­omy’s per­for­mance, that sen­ti­ment hasn’t nec­es­sar­ily broad­ened voter sup­port for Pres­i­dent Don­ald Trump or Repub­li­can con­gres­sional can­di­dates.

At some point, job growth will mod­er­ate and likely even re­v­erse it­self, par­tic­u­larly if the econ­omy — now in its 10th year of ex­pan­sion, the sec­ond-long­est such stretch on record — tips into re­ces­sion. LaVorgna thinks the cause will most likely be the Fed­eral Re­serve’s on­go­ing in­ter­est rate hikes, which could squelch growth by mak­ing bor­row­ing in­creas­ingly ex­pen­sive for busi­nesses and house­holds. Or the Trump ad­min­is­tra­tion’s trade wars could weaken the econ­omy enough to de­press hir­ing.

Con­trary to the con­cerns of some an­a­lysts, LaVorgna doesn’t en­vi­sion an econ­omy-wide short­age of avail­able hires any­time soon.

“There is no ev­i­dence that the econ­omy ever runs out of work­ers dur­ing an eco­nomic ex­pan­sion,” he said.

More em­ploy­ers are step­ping up their pay in­creases in or­der to at­tract and re­tain work­ers. Re­tail­ers like Ama­zon, Wal­mart and Tar­get have been steadily rais­ing their en­try-level wages, with Ama­zon pay­ing $15 an hour start­ing on Thurs­day.

A pickup in av­er­age pay sug­gests that com­pa­nies have to work harder to fill their open po­si­tions. Higher pay can also draw peo­ple who aren’t work­ing and hadn’t been seek­ing a job to be­gin look­ing.

Amer­i­cans who are nei­ther work­ing nor look­ing for work aren’t counted as un­em­ployed. For some of them, the costs of child­care and com­mut­ing to a job can out­weigh the fi­nan­cial ben­e­fit of a job. Yet as pay rises, that cal­cu­la­tion can change in fa­vor of seek­ing work.

Salaries for pri­vate-sec­tor work­ers rose 3.1 per­cent in the July- Septem­ber quar­ter com­pared with a year ago, the govern­ment said Wednes­day. That was the strong­est in­crease in a decade.

Still, by most mea­sures, av­er­age wage in­creases re­main below the lev­els they reached the last time un­em­ploy­ment was this low. That may in­di­cate that em­ploy­ers aren’t quite pan­ick­ing about find­ing enough peo­ple to hire.

Pay in­creases are “grind­ing higher,” said Ian Shep­herd­son, chief econ­o­mist at Pan­theon Macro eco­nomics. “But they aren’t ex­plod­ing.”

One rea­son may be there are some ways in which em­ploy­ers can find work­ers with­out of­fer­ing larger raises.

Re­search by econ­o­mists at the job list­ing site In­deed has found that that the pro­por­tion of Amer­i­cans work­ing part time who would pre­fer full-time jobs re­mains el­e­vated.

About 2.9 per­cent of all work­ers are in that cat­e­gory, com­pared with 2.6 per­cent be­fore the re­ces­sion and 2.2 per­cent in 2000, when the un­em­ploy­ment rate was nearly as low as it is now.

Martha Gim­bel, re­search direc­tor for In­deed, says that com­pa­nies can of­fer more hours to their part­time work­ers with­out nec­es­sar­ily hav­ing to raise pay. That’s eas­ier than hav­ing to dan­gle siz­able raises to re- cruit work­ers from other com­pa­nies. The num­ber of part-time work­ers who would pre­fer more hours has been drop­ping — a sign that com­pa­nies are al­ready tak­ing that step.

“I do think the job mar­ket has room to im­prove,” Gim­bel said.

The pro­por­tion of Amer­i­cans in their prime work­ing years — 25 through 54 — who have jobs re­mains below its pre-re­ces­sion level, though it’s risen since 2013. If more peo­ple in this group be­gan look­ing for work, em­ploy­ers could keep hir­ing de­spite the low un­em­ploy­ment rate. Such a trend would help off­set the steady re­tire­ment of the baby boom gen­er­a­tion.

In the mean­time, some econ­o­mists have fore­cast that strong hir­ing will con­tinue to shrink the un­em­ploy­ment rate, po­ten­tially to lev­els not seen since the Korean War in the 1950s. Gold­man Sachs fore­casts that the job­less rate could de­cline to 3 per­cent by the end of 2020. Fed­eral Re­serve pol­i­cy­mak­ers fore­see a smaller drop by then to 3.5 per­cent.

Mark Zandi, chief econ­o­mist at Moody’s An­a­lyt­ics, said that the monthly pace of hir­ing will ul­ti­mately have to drop by as much as half as the ranks of the un­em­ployed fall fur­ther.

“This rate of job growth is not sus­tain­able,” he said.

But, Zandi ac­knowl­edges that the strength of U. S. hir­ing has en­dured longer than he had ex­pected.

“I am sur­prised that we have been able to main­tain this rate of job growth up un­til this point,” he said. “I don’t know when, but it will slow.”


So far in 2018, em­ploy­ers have added an av­er­age of 208,000jobs a month. The job­less rate is 3.7per­cent.

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