Jobless rate down, hiring solid in July
WASHINGTON — A drop in the unemployment rate to a 16-year low raises a tantalizing question about the job market: How much better can it get?
Earlier this year, economists worried that the low unemployment rate meant businesses would struggle to find workers and that would drag down the pace of hiring. Those fears were heightened by a tiny job gain in March and modest hiring in May.
Yet Friday’s jobs report suggests such concerns are premature. Employers added 209,000 jobs in July, after a solid gain of 231,000 in June, the Labor Department said. The unemployment rate ticked down to 4.3 percent from 4.4 percent, matching the low reached in May.
The U.S. economy is benefiting from steady growth around the world, with Europe and Japan perking up and China’s economy stabilizing. Corporate revenue and profits are growing, too, and the stock market has hit record highs.
Economists were particularly encouraged by the fact that more Americans are coming off the sidelines and finding jobs. For the first few years after the recession, many of the unemployed stopped looking for work.
Some were discouraged by the lack of available jobs. Others returned to school or stayed home to take care of family. The government doesn’t count those out of work as unemployed unless they are actively searching for jobs.
That trend began to reverse last year and has continued into 2017. To many economists, that means robust hiring could continue for many more months, or
even years.
“There’s more people willing to work than the unemployment rate would have you believe,” said Nick Bunker, a senior policy analyst at the Washington Center for Equitable Growth, a liberal think tank.
President Donald Trump celebrated the data in a tweet shortly after the numbers were released. “Excellent Jobs Numbers,” he wrote, “and I have only just begun.”
Trump technically tweeted too early: His comment was posted at 8:45 a.m., just 15 minutes after the report was released. Federal rules specify that White House officials should wait for an hour before publicly commenting. The rule is intended to allow the data to be released without political spin.
President Barack Obama’s former top economic adviser, Jason Furman, noted the slipup, calling it a “minor transgression.”
The pace of hiring so far this year, while solid, is pretty much the same as it was last year under Obama. Employers have added an average of 184,000 jobs a month through July, compared with an average of 187,000 in 2016. Monthly job gains topped 200,000 on average in 2014 and 2015.
The steady hiring is adding up. In July, the proportion of Americans ages 25 through 54 who had a job or were looking for one rose to 81.8 percent, up half a percentage point from a year earlier and the highest since December 2010.
Economists focus on that age group because it filters out the impact of retirements by the huge baby boomer generation and excludes younger workers who are more likely to be in school.
That means more Americans are optimistic about the job market and launching job searches. But that proportion is still substantially lower than the all-time peak of 84.6 percent, reached in January 1999.
There’s no way to know whether that peak could be reached again. Many economists are doubtful, in part because it rose sharply in the 1980s and 1990s as women flooded into the workforce. The proportion of women working or looking for work has slipped since 2000.
Based on historical trends, the share of working-age Americans who either have jobs or are looking for one could rise another 0.7 percentage point. That would create 1.8 million more jobs, according to Andrew Sojourner, an economist at the University of Minnesota.
Robert Maynard, CEO of Famous Toastery, a 22-restaurant chain based in Charlotte, N.C., is still looking to hire. He plans to add 10 more restaurants later this year, which should create about 250 fulltime jobs.
At the same time, he said, other restaurants are also expanding and some are even peeling away his employees by offering higher pay. He’s responded by boosting wages 10 to 15 percent.
Restaurants and bars added 53,100 jobs in July, roughly a quarter of all the job gains that month. And restaurant employees are seeing their pay rise faster than other workers. Average hourly pay in the industry jumped 4.7 percent in June from the previous year, the latest data available.
That compares with just 2.5 percent for all workers. Sluggish wage growth has been a persistent weak spot in the recovery. Wage gains are typically closer to 4 percent a year with the unemployment rate this low.
The transportation industry slumped from June, but overall there are about 50,100 more people on payroll in this sector than in July 2016. There were about 4.1 million on the payroll in June. In July, that sum fell by about 53,600.
The number of public transit workers continues to fall — from 493,800 in May, to to 470,000 in June, to 417,600 in July as ridership across the nation continues to drop, according to the New Yorkbased Transit Center. Jobs at Rock Region Metro, Arkansas’ largest transit agency, remained mostly stagnant, adding about three operators since last July, though its number of mechanics fell from 26 to 23 employees, Director of Public Engagement Becca Green said.
Water transit workers dropped slightly from June, and there were about 2,000 fewer in July 2017 than July 2016. Rail workers stayed the same from June to July but were down by almost 50 percent from July 2016, when there were roughly 214,400 rail transit workers on payroll. There were about 3,000 more trucking employees in July than June. From July of last year to July 2017, there were about 21,000 more truckers on company payrolls.
Some economists think it may be harder to pull many more workers off the sidelines.
A large proportion of those who aren’t looking for work say they are disabled or ill. Some research indicates many are addicted to painkillers, noted Jed Kolko, chief economist for Indeed, a job listings website.
“They’re the kinds of reasons that might not be overcome with slightly higher wages,” Kolko said. “It’s really hard to know what it would take to get people who have left the labor force to come back.”
And many economists argue that demographics will eventually limit how much more hiring can happen. The U.S. population is aging and population growth has slowed in the past two decades. Information for this article was contributed by Dalton LaFerney of the Arkansas Democrat-Gazette and by Josh Boak and Jesse Holland of The Associated Press.