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With 8 Years of Job Gains, Unemployment Is Lowest Since 1969 With 8 Years of Job Gains, Unemployment Is Lowest Since 1969
(about 7 hours later)
The Labor Department released its official hiring and unemployment figures for September on Friday, providing the latest snapshot of the American economy. The unemployment rate fell to a nearly five-decade low in September, punctuating a remarkable rebound in the 10 years since the collapse of Lehman Brothers set off a global financial crisis.
■ 134,000 jobs were added last month. Wall Street economists had expected an increase of about 168,000, according to MarketWatch. By almost any measure, the American economy is humming. Gross domestic product is on pace for its best year since the housing bubble of the mid-2000s. Consumers and businesses are the most confident they have been in years, if not decades. Stock market indexes are near record highs.
■ The unemployment rate was 3.7 percent, the lowest since 1969. The latest milestone came in a Friday report from the Labor Department: The unemployment rate fell to 3.7 percent last month, the lowest since December 1969, when hundreds of thousands of working-age Americans were serving in Vietnam.
■ Average earnings rose 8 cents an hour and are up 2.8 percent over the past year.
■ Hiring figures for July and August were revised up by a combined 87,000 jobs.
The unemployment rate fell to a nearly five-decade low in September, punctuating a remarkable rebound in the ten years after the collapse of Lehman Brothers set off a global financial crisis.
The 134,000 jobs that employers added in September reflected the slowest pace of growth in a year, and the growth in wages cooled slightly from August.
But there is little evidence that those mildly disappointing figures suggest a broader slowdown. The report on Friday extended the current run of monthly job growth to eight straight years, double the previous record.
By nearly any measure, today’s labor market is the strongest since the dot-com boom of the late 1990s and early 2000s. Job growth has repeatedly defied economists’ predictions of a slowdown. African-Americans, Latinos and members of other groups that often face discrimination are experiencing some of their lowest rates of joblessness on record.
“I view this as the strongest labor market in a generation,” said Andrew Chamberlain, chief economist at the career site Glassdoor. “These really are the good times.”“I view this as the strongest labor market in a generation,” said Andrew Chamberlain, chief economist at the career site Glassdoor. “These really are the good times.”
The current economic expansion is already one of the longest on record, and there is no sign that it is losing steam. Economic output last quarter increased at its fastest pace in four years, and the current quarter looks strong as well. Yields on United States government bonds have risen sharply in recent days, an indication that investors expect faster growth, and more inflation, in coming years. The turnaround from a decade ago is hard to overstate. In September 2008, American employers cut 443,000 jobs as the financial system collapsed around them. More than seven million more jobs evaporated in the months that followed. Even when the hemorrhaging stopped, shellshocked executives were slow to bring back laid-off workers, sparking fears of a “jobless recovery.”
For months, the one knock on the economy has been that strong hiring has not yet translated into robust pay gains for many workers. There are signs that that could finally be changing. But when the hiring engine finally kicked back into gear, it did so in historic fashion. The 134,000 jobs added in September made it the 96th consecutive month of growth — eight full years, double the previous record. Employers have added close to 20 million jobs during that streak. (September’s growth, a modest slowdown from August, would probably have been stronger absent the effects of Hurricane Florence, which struck the Carolinas in the middle of the month.)
The 2.8 percent increase in average hourly earnings last month compared with a year earlier was down slightly from the 2.9 rate in August. But earnings growth has drifted upward in recent months, and other measures show stronger growth. Crucially, the recovery is reaching groups that struggled in the early years of the recovery. The unemployment rates for African-Americans and Hispanics are both near all-time lows. Teenagers, less-educated workers and disabled Americans have also made progress in recent months. And anecdotal reports suggest that companies are becoming more willing to hire people with criminal records or to waive drug-testing requirements.
Workers at the bottom of the earnings ladder are seeing particularly strong growth: Amazon announced this week that it would raise the minimum wage for all of its employees in the United States to at least $15 an hour. Republicans are hoping the strong economy will help them hold off a potential “blue wave” of Democratic victories in next month’s midterm elections. Friday’s report was one of the last before Election Day, and President Trump wasted no time before cheering the news on Twitter.
Amy Glaser heard the Amazon news on television while preparing for a meeting with a rival e-commerce firm. Ms. Glaser, a senior vice president at the staffing firm Adecco, helps companies hire for the holiday season, a task that Amazon had just made even more difficult. It isn’t clear, however, that economic data will have much effect at the polls. Surveys show that views of the economy are split along partisan lines, with Democrats and even many independents expressing less optimism than Republicans.
“There was definitely a feeling of concern,” Ms. Glaser said. “It puts increased pressure on them in a market where they already knew they were going to have to make significant adjustments on wages.” Indeed, the decade-long economic rebound from the financial crisis has been impressive more for its durability than for its strength. Millions of Americans remain stuck in part-time or temporary work, and many of the middle-class jobs wiped out by the recession have never returned. As a share of the population, employment remains well below its 2000 peak, a gap only partly explained by the aging population.
Higher pay alone may not be enough. The combination of a tight labor market and rapidly growing online sales has made the competition for warehouse workers particularly fierce this year. Ms. Glaser said that companies were moving up their hiring timelines, easing job requirements and giving workers more control over their schedules, a big shift in an industry where employees have traditionally been expected to show up when and where they were needed. Most significant, strong hiring has not yet translated into robust raises for many workers. Average hourly earnings rose 2.8 percent in September from a year earlier, down from 2.9 percent in August and well below the growth that economists would usually expect with the unemployment rate this low.
“The demand for workers is higher than ever and the supply just isn’t out there right now,” Ms. Glaser said. But there are signs that wage growth could at long last be gaining momentum. Before last month’s hiccup, the pace of growth had been drifting upward. Industries where labor is especially tight, such as construction and technology, are seeing wages rise faster.
One challenge for employers: The strong job market is not yet pulling workers in off the sidelines, at least not enough to offset the exodus of retiring baby boomers. The labor force participation rate — the share of adults who are working or actively looking for work — was unchanged in September and has been more or less flat for several years. Workers at the bottom of the earnings ladder, who were left behind early in the recovery, are now seeing particularly strong growth: Amazon announced this week that it would raise the minimum wage for its employees in the United States to $15 an hour.
Low unemployment and faster wage growth are good news for workers, but policymakers at the Federal Reserve are watching warily for signs that the economy is “overheating” — that the tight labor market and strong economy are sowing the seeds for faster inflation down the road. If those concerns mount, the Fed might raise interest rates more quickly than planned, which could bring the recovery to an end. Amy Glaser, a senior vice president at the staffing firm Adecco, heard the Amazon news on television while preparing for a meeting with a rival e-commerce firm. Ms. Glaser helps companies hire for the holiday season, a task that Amazon had just made even more difficult for them.
Friday’s report should ease those fears because the jobless rate fell sharply without bringing a sharp rise in wage growth. That suggests employers are still finding the workers they need. “There was definitely a feeling of concern,” she said. “It puts increased pressure on them in a market where they already knew they were going to have to make significant adjustments on wages.”
“I think the Fed’s going to really like this report,” said Michelle Meyer, head of United States economics for Bank of America Merrill Lynch. “This report will not prompt them to have to make the hard decision to think about going faster” on rate hikes. Higher pay alone may not be enough. The combination of a tight labor market and rapidly growing online sales has made the competition for warehouse workers particularly fierce this year. Ms. Glaser said companies were hiring earlier, easing job requirements and giving workers more control over their schedules, a big shift in an industry that has traditionally expected workers to show up when and where they are needed.
The report appears to fit with recent comments from Jerome H. Powell, the Fed chairman, who said this week that the economy was good but “not too good to be true.” “The demand for workers is higher than ever, and the supply just isn’t out there right now,” Ms. Glaser said.
Some economists had warned that the numbers for September might be skewed by the effects of Hurricane Florence, which hit the Carolinas in the middle of the month. But the report released on Friday suggests the storm’s impact may have been muted. Christine Specht is dealing with just that challenge. Ms. Specht runs Cousins Subs, a Wisconsin sandwich chain that is struggling to find workers as it looks to expand into the Chicago area.
The Bureau of Labor Statistics said survey response rates were “within normal ranges.” About 300,000 people reported being not at work because of bad weather — more than in a typical month, but far below the 1.5 million kept out of work a year ago, when hurricanes hit Florida and Texas. Cousins has raised wages in recent years but still pays well under the $15 an hour that Amazon and other big companies are promising. As the operator of a small chain in a competitive industry, Ms. Specht said, she is reluctant to raise prices in order to pay employees more.
Florence affected a smaller part of the country than last year’s storms did, and hit at a time in the month when it was less likely to disrupt data collection or measurement. Still, the storm could help explain the slowdown in job growth in September. The retail and hospitality sectors, which are particularly sensitive to bad weather, cut a combined 37,000 jobs. Economists also cautioned that the storm might have muddied measures of earnings and working hours, at least in some industries. “We can’t always run to the menu board every time there’s a cost increase in running our business,” Ms. Specht said. “That’s kind of a last resort.”
The report on Friday was one of the last major economic releases before November’s midterm elections. The next round of jobs data will come four days before Election Day, and most voters’ minds may be made up by then. Instead, the company is looking for other ways to attract workers. Cousins has ramped up its training program to help workers advance into management, offered referral bonuses to employees who help recruit their friends and staged “hiring blitz days,” when executives set up shop in a restaurant and interview candidates on the spot. More than anything, they are trying to move quickly.
Republicans are counting on a strong economy to help hold off a potential “blue wave” of Democratic victories in the House and Senate. President Trump has repeatedly played up the low unemployment rate as evidence that his policies are working. On Friday, he cheered the report on Twitter. “You can’t sit on applications anymore, because people have options and they will go somewhere else,” Ms. Specht said.
It is not clear, however, that economic data will have much effect at the polls. Surveys show that views of the economy are split along partisan lines, with Democrats and even many independents expressing less optimism than Republicans. Many economists think the shortage of workers will cause job growth to slow in the months ahead. But others argue that there is still room for the labor pool to expand, as employers become willing to consider candidates they would have overlooked earlier and as higher wages attract people who had been choosing not to work.
Economists and business leaders have warned for months that Mr. Trump’s trade policies could threaten the recovery, particularly in the manufacturing sector. There is little sign of that so far, however. Manufacturers added 18,000 jobs in September, and the revised figures erased what was initially reported as a small decline in August. Other measures of the industrial sector likewise show continued growth. “You did see something like that in the late ’90s, which is probably the closest analogue,” said Jeremy Schwartz, an economist for Credit Suisse in New York. “In a sufficiently strong labor market, you really were pulling people from the sidelines.”
It is unclear whether that can happen again. In the 1990s, baby boomers were in their prime working years; today, they are retiring at a rate of 10,000 a day. The number of people being hired from outside the labor force is near an all-time high. Yet the participation rate — the share of adults working or actively looking for work — has been essentially flat in recent years.
“You do see prime-working-age individuals coming back into the labor force,” said Michelle Meyer, head of United States economics for Bank of America Merrill Lynch. “But the demographic forces are so fierce that it provides a complete offset.”
Policymakers at the Federal Reserve are watching warily for signs that the shrinking pool of labor is leading the economy to overheat, as competition for workers drives up wages and, ultimately, inflation. That could force the Fed to raise interest rates more quickly than planned, which could cause a recession.
Yields on United States government bonds have risen sharply in recent days, a sign that investors expect inflation — and interest rates — to rise in coming years. Those concerns have also filtered through to the stock market, where major indexes fell again on Friday after dropping on Thursday.
But in a speech in Boston earlier this week, Jerome H. Powell, the Fed chairman, said he didn’t see the tight labor market translating into faster inflation. Friday’s report, which showed the unemployment rate falling without wage growth accelerating, is unlikely to change that view, Ms. Meyer said.
With the economy in such strong shape, attention on Wall Street has turned to what could bring the good times to an end. Fed rate increases are one popular answer. A trade war is another.
Economists and business leaders have warned for months that Mr. Trump’s tariffs could threaten the recovery, particularly in manufacturing. There is little sign of that so far, however. That sector added 18,000 jobs in September, and the revised figures erased what was initially reported as a small decline in August. Other measures of the industrial sector likewise show continued growth.
“We really don’t have any negative impact from the tariffs yet,” said Joseph Brusuelas, chief economist for the consulting firm RSM.“We really don’t have any negative impact from the tariffs yet,” said Joseph Brusuelas, chief economist for the consulting firm RSM.