Inside the Hottest Job Market in Half a Century
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The tight labor market is proving advantageous for American workers, with real wage growth accelerating as unemployment remains low. Disadvantaged workers are benefiting from increased employment opportunities & wage gains.
"... “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.... The plan seems to be paying big dividends now, but will it yield long-term results for American workers? Two risks loom. The first is that the low-skill workers who benefit most from a high-pressure job market are often hit hardest when the job market turns south. Consider what happened to high-school dropouts a little more than a decade ago. Their unemployment rate dropped below 6% in 2006 near the end of a historic housing boom, then shot up to more than 15% when the economy crumbled....The U.S. is adding jobs in low-skilled services sectors. Four of the six occupations the Labor Department expects to add the most jobs through 2026 require, at most, a high-school diploma. Personal-care aide, a job which pays about $11 an hour to help the elderly and disabled, is projected to add 778,000 jobs in the decade ended in 2026, the most of 819 occupations tracked. The department expects the economy to add more than half million food prep workers and more than a quarter million janitors. Those low-skill workers are reaping pay gains in part because there aren’t a lot of people eager to fill low-skill jobs anymore. Only about 6% of U.S. workers don’t hold a high school diploma, down from above 40% in the 1960s, according research by MIT economist David Autor James O. Wilson dropped out of high school in the 10th grade and started selling drugs, which eventually led to a lengthy incarceration. When Mr. Wilson, 59, was released in 2013 he sought out training at Goodwill, where he learned to drive a forklift. Those skills led him to a part-time job at a FedEx Corp. facility at an Indianapolis, Ind., airport. He was promoted to a full-time job in 2017, and is now earning more than $16 an hour. He has a house with his wife and enjoys taking care of his cars, including a prized Cadillac. “I wanted to show FedEx you can take a person, and he can change,” he said. “I want FedEx to say, ‘Do you have any more people like him?’” Skilled workers in high-tech and managerial positions are also benefiting from the high-pressure labor market, particularly in thriving cities. Of 166 sectors that employ at least 100,000 Americans, software publishing pays the highest average wages, $59.81 an hour in the fourth quarter of 2018. Wages in the field grew 5.5% from a year earlier, well outpacing 3.3% overall growth in hourly pay. The average full-time employee in the sector already earns more than $100,000 a year...."
Eric Morath and Lauren Weber, "Inside the Hottest Job Market in Half a Century,"Wall Street Journal, March 1, 2019, https://www.wsj.com/articles/inside-the-hottest-job-market-in-half-a-century-11551436201
