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Low Joblessness Is Lifting All Boats

Are you experiencing the benefits of low jobless numbers?

by Axios | Updated on 12.12.18

For more than a year, the U.S. jobless rate has hovered right around 4% — including the last three months, when it's been a mind-boggling 3.7%, a half-century low. Fast-growing companies desperate for workers have turned to accepting candidates with lesser skills, drug use and felony records, dispensing with long-held hiring red lines.

Why it matters: If these trends continue, they may begin to whittle away at some of the nation's most stubborn problems — that millions of Americans have given up trying to find work after years of unemployment, and a vast number of jobless people lack sufficient skills for the quickly advancing economy.

What's happening: For five years, the labor participation rate — the percentage of people aged 16 and up who are working or actively seeking work — has been below 63%, and has been slowly declining. Historically speaking, the absolute number is not bad — it was even lower from 1948 through 1978. And many of those technically unemployed people are over 65 and retired. But in the four decades since, the rate has climbed as high as 67% — and economists have puzzled over how to get back to those bigger numbers.

The nine-year-old economic expansion has not budged the figure yet, but it has pulled hundreds of thousands of long-term unemployed people into jobs, often at companies where they learn transferable skills when previously they had few. Wages are up 3.1% this year, below rates in other historically tight job markets but also the first substantial gains in a decade.

Among the little-discussed spillover effects:

  • These workers may be far more employable when they look to climb the economic ladder. "Just breaking a long spell of unemployment improves someone’s employment prospects going forward," says Oren Cass, author of "The Once and Future Worker."
  • The 3.5% jobless rate for those with only a high school diploma is its lowest in 18 years.
  • In the aggregate, these numbers may juice the entire economy, creating the conditions for higher GDP growth and "a persistent, positive macroeconomic effect," says Jason Furman, former chief economist to Barack Obama and now a professor at Harvard.

"This is win-win for employees and the aggregate economy," says Darrell West, head of the Center for Technology Innovation at the Brookings Institution. "Over time, having a better trained workforce will boost productivity and improve national competitiveness."

The background: For years, one of industry's biggest gripes has been a shortage of skilled workers, and economists have unflatteringly compared U.S. technical skills with those in Europe and Asia, not even in the top 10 countries in some rankings.

In addition, there are worries about slowing U.S. economic growth and a potential recession in the rest of the world.

The impact of training more and more of the unskilled work force is to change the country's underlying structure: The entire country starts out at a higher level of competency.

Yes, but: Adam Posen, president of the Peterson Institute for International Economics, tells Axios that research is not clear yet on how much of a lift such conditions provide to workers or the economy.

  • A boom from 1995 to 2000 pulled a lot of workers into the U.S. economy, but it "didn’t have as much lasting benefit of re-employability or staying in the workforce when the economy turned down as we expected," Posen said. 
  • "That may have been because the recession that eventually came was so large and abrupt."
  • But Rick Wartzman, head of the Center for a Functioning Society at the Drucker Institute, said he is skeptical about the long-term economic impact of the current expansion. "I don't want to confuse what might be happy momentarily with what has been going on for 30 years," he said.

Go deeperEmployers say it's harder to find workers

Axios

Written by Axios

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(91)
  • burrkitty
    Voted No
    12/12/2018
    ···

    I’m not making anymore money. I’m not able to reduce My hours or quit one of my jobs, nor pay off my student loans faster, nor afford to buy a house. Just being employed doesn’t mean you are doing well.

    Like (42)
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  • ColonelMoose
    Voted Yes
    12/12/2018
    ···

    Making American great again. As promised.

    Like (14)
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  • Barb
    12/12/2018
    ···

    Lots of jobs. Low salaries. No benefits. Fake potus is making America grovel again. Let’s all wear those MAGA hats. But be clear what MAGA stands for.

    Like (7)
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  • Brian
    Voted Maybe
    12/12/2018
    ···

    I've had my job for the past several years, but others at my company have been laid off this year, so I don't know if I'm benefiting. I do know of people in Higher Education who are struggling because of declining immigration and less funding, so I see that not all jobs are prospering.

    Like (7)
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  • thegrizzled1
    Voted No
    12/12/2018
    ···

    It’s the same old story, the job market is flooded with 9.00-13.00 an hour jobs with absolutely no benefits or health care due to a manipulation of weekly working hours keeping everyone under the amount that deems them full time. I’m 64 and made 13.34 cents an hour working for General Electric back in 1975 in Milwaukee, Wisconsin. We were given a full benefits package which included an actual health care coverage plan. I was able to support my family then. How the hell can Trump World expect a family to survive on what I received in 1975?

    Like (15)
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  • Ronald
    Voted Yes
    12/12/2018
    ···

    JFK was right: "A rising tide lifts all boats." Conservative Principles work. Liberalism ( as displayed today" is the failed concept.

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  • John
    12/12/2018
    ···

    I see a lot of people around here working a job or two they won’t have looked at 25 years ago at wages corrected for inflation well below that, and of course, no benefits. Recent layoffs. Even though people are working, (no unemployment anyway), not much money to spend. People taking on more credit. McMansions may be selling but most people’s boats around here are stuck in the muck. This may be true for some regions, and we’re not seeing people in 3 piece suits looking for temporary work like in 2008, but no need to get euphoric. This is propaganda, but people are buying it. Even many who haven’t benefited.

    Like (6)
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  • Dan
    Voted Maybe
    12/12/2018
    ···

    I’m doing good

    Like (2)
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  • Lionman
    Voted No
    12/12/2018
    ···

    While I’m happy that we’re at full employment, those who want a job have one...those of us who have been long-time employees (read 20+ years) aren’t seeing any boost for us, our boat isn’t rising in this tide, which means its effectively sinking. We’re not getting one-time bonus from a tax cut, we’re not getting more than our 2% raise for being an outstanding team member, doing the work of 2+ people. Many of us are still waiting to get the additional $50/pay period that this last tax cut was supposed to give us.

    Like (15)
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  • Aaron
    Voted No
    12/12/2018
    ···

    Wages still suck.

    Like (11)
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  • Christopher
    Voted No
    12/12/2018
    ···

    Wages and cost of living continue to grow disproportionately for taxpayers and consumers. The only ones truly benefitting are the top income earners in this country and paying little of the tax burden in the process.

    Like (8)
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  • PascalG
    Voted No
    12/12/2018
    ···

    The jobless rate is meaningless when the wages being paid are a record low, health care and retirement benefits are all but unavailable. It's great that McDonald's and Walmart are having trouble filling open positions, but who wants to work in those establishments for low wages and no benfits?

    Like (6)
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  • Steve
    Voted No
    12/12/2018
    ···

    The only thing I'm seeing is higher prices.

    Like (5)
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  • Joshua
    Voted No
    12/12/2018
    ···

    I'm glad that unemployment is down, but these are still low-paying, and in most cases part-time jobs. I certainly haven't seen a raise, and my employer has made it pretty clear that they wouldn't care if I took my years of experience elsewhere. Today's employers, by-and-large, do not want "skilled labor" or experience. They want people who are desperate to accept the bare minimum in wages and benefits—people they can throw into roles designed to require little training, and discard just as easily. What we need is not just low unemployment but a living minimum wage and increased worker protections. What we need is universal health care, so we aren't dependent upon an employer that mistreats us to guarantee our insurance. What we need is to enforce antitrust laws to break up companies that are dominating the market on the backs of underpaid and mistreated workers. Low unemployment means very little if we're all working ourselves to death for low compensation.

    Like (5)
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  • Leon
    Voted No
    12/12/2018
    ···

    Since the flood of H1B impacts IT the most. Good for lobbyists and corporations but not for citizens.

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  • ProudAmerican
    Voted Yes
    12/13/2018
    ···

    It blows my mind how negative you hateful people are here on Countable. Yes, the Obama Administration led the Nation through and out of the Recession, but the economic expansion and growth during his eight years was incredibly anemic, and historically slow due to his policies. Through tax reform, banking reform, and regulatory reform, among other factors the Trump Administration has led us to unprecedented economic growth and prosperity.

    Like (4)
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  • KansasTamale
    Voted No
    12/12/2018
    ···

    There are so many unemployed in Kansas that we have homelessness at a staggering rate. Many of the jobs now are only seasonal and they’ll be looking for a job again after the holidays.

    Like (3)
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  • Eric
    Voted No
    12/12/2018
    ···

    Who is benefiting? Billions had to be spent to help farmers. Car manufacturers are closing plants and moving away. The minimum wage cannot support a person much less a family. Lots of people have a job, and a 2nd job, maybe a 3rd and still can’t support a family.

    Like (3)
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  • John
    Voted No
    12/12/2018
    ···

    Only if you are wealthy already.

    Like (3)
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  • DrCindyBean
    Voted No
    12/12/2018
    ···

    The economy is not working well for most people.

    Like (3)
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  • James
    12/12/2018
    ···

    I do not trust the reporting. There has been systematic purging of the count by removing long standing unemployed. The agency responsible has lost all of my respect for credibility. This is definitely a case of believing your own PR.

    Like (2)
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