Good News in the Labor Market The black and Hispanic jobless rates are at record lows.
https://www.wsj.com/articles/good-news-in-the-labor-market-1525640801
Equity investors loved Friday morning’s jobs report for April, lifting share prices sharply across the board. Job growth for the month fell below expectations, but maybe Mr. Market looked at the details and saw the broader reality of an increasingly tight labor market that suggests business confidence in continuing economic growth. A couple of key figures that haven’t received much attention are worth noting.
Republican politicians pointed to the decline in the overall jobless rate to 3.9% after six months of 4.1%. But this was achieved thanks to a 236,000 decline in the U.S. labor force. That decline balances what happened in February when the rate stayed at 4.1% despite more than 800,000 new entrants to the labor force. A better way to look at the health of the jobs market is the long-term trend, and over the last year there is some notable good news.
The black jobless rate has fallen a remarkable 1.3-percentage points to 6.6% since April 2017. That’s still high compared to the 3.6% rate for whites, but it’s lower than the 6.8% recorded in December, which was the previous low since the government began tracking the data in 1972. The black jobless rate has been below 7% for four of the last five months, which has never previously happened.
The jobless rate for Hispanics has fallen by 0.4-points in a year to 4.8%, matching its record low. The Hispanic rate has now been below 5% for five of the last seven months. Also encouraging is the 0.6-point decline in the jobless rate for workers age 25 or older without a high school diploma—to 5.9% despite a bump up in April. That rate has now been below 6% for five of the last six months.
These trends show that the economy’s faster growth in the last year is luring even some of the least skilled workers back into the labor force. There’s a debate about how many workers continue to sit on the sidelines given the still-low labor participation rate. But the best way to find out is to keep the economy growing and pass welfare reforms to improve the incentives to work.
Wages so far haven’t risen as rapidly as you’d expect, but this may reflect that many new labor-market entrants are coming back at lower wage points. As they spend more time on the job, the pace of wage gains should accelerate. The overall news from April is that faster growth is paying off for all Americans.
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