On Friday, the April jobs report reported 263,000 jobs created, compared to an estimated 185,000 from economists. Since the end of the Great Recession, more than 20 million jobs have been created. Unemployment rate also ticked down to a 49 year low of 3.6% as “notable jobs gains occurred in professional and business services, construction, health care, and social assistance”, said the Labor Department. However, retail trade shed about 12,000 jobs following the loss of about 15,000 in March.
As the unemployment rate continues to fall to a generational low, employers are generally finding it increasingly difficult to fill open positions. Workers are not being forced into any position and are able to shop around for what suits them.
The participation rate, number of people available for work as a % of the total population, fell slightly in April to 62.8% from 63%, but the rate has been trending in the right direction in the several months. Workers might be getting persuaded with higher wages (up 3.2% from year to date) and slowly entering the work force, thus, help solve the current labor shortage. Unfortunately, overall wage growth has still been the most disappointing part of our 10+ year economic expansion.
Wages have indeed grown 3.2% from 12 months ago but this does not account for inflation. It has recently fallen to 1.9% compared to a high of 2.4% in 2018, but this ultimately means that income growth only grew 1.3% in the past year, barely keeping up to the cost of living. Normally and history has shown that when the unemployment rate falls, employers tend to compete with one another by offering better wages to workers to attract them. However, employers seem to be keeping more of the profits for themselves and doing their best to output the same level of productivity without increasing wages. With frustration continuing to build over stagnant wages and the Republican Tax Cuts doing little to nothing for workers, workers have taken to the streets to strike in behalf of better pay and even having ballot measures to increase minimum wages. However, these ballot measures alone will not get the job done to increase wages overall.
Large corporations have seen record profits and given huge bonuses to those at the top but what about employees at the bottom? Don’t they deserve a bigger share of the pie?
Michaelnomics 