The U.S. economy is picking up speed, and it’s paying dividends in an expanding job market. The Labor Department reported Friday that the unemployment rate fell in May to 3.8%, an 18-year low, while more workers are joining the party from the sidelines. President Trump’s tax reform and deregulation agenda appears to be working, assuming his protectionist trade policies don’t interfere.
Employers added 223,000 jobs in May, exceeding the monthly average of 191,000 over the last year. Although labor-force participation remains stuck at a stubbornly low 62.7%, the report’s details show that workers who are often on the edges of the economy see opportunities worth grabbing. Notably, the number of people who have been jobless for 27 weeks or more has fallen by 476,000 over the last year. The number of full-time workers has increased by about three million while part-timers have dropped by 457,000.
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In particular good news, the jobless rate continues to fall for workers with less than a high school diploma (5.4% from 6.2% a year ago) and black Americans (to 5.9% from 7.6%) as 208,000 blacks joined the labor force. Workers age 25 to 34 made up 1.04 million of the 2.58 million jobs added over the last year while those over 55 contributed 1.08 million. Job and wage growth may finally be inducing young people out of their parents’ basements.
All of this fits with the anecdotal news from employers who say they can’t find enough workers. Manufacturers have reported employing high-school students. In Maine where the unemployment rate has dipped to 2.7%—the lowest in more than 40 years—a temp agency has built a thriving business out of hiring and rehabilitating convicted felons who have served their time.
Amid stiff competition for workers, employers are also raising wages, which have climbed 2.7% in the last 12 months but showed signs of accelerating with a 0.3% increase in May. This is less than what some economists project at such a low jobless rate, but the aggregate figure may be somewhat depressed by the huge increase in employment among lower-skilled workers.
A Chick-fil-A in Sacramento this week said that it would increase worker pay to $17 per hour to reduce employee turnover. Walmart this week announced plans to subsidize college tuition for employees. The Journal last week reported that a Colorado company is trying to lure more plumbers by offering craft beer, a putting green and “a lot of Zen.” We’d prefer cash, but we won’t judge millennials.
Despite glum headlines of Sears closing dozens of stores, retail jobs increased by 31,000 last month and 125,000 over the last year. Employment in construction has swelled by 286,000 since May 2017.
The Labor Department last month reported 6.6 million job openings. The tight labor market underscores the need for more seasonal guest workers, and the Labor Department ought to approve more H-2B visas to meet the economic demand this summer. Immigrants aren’t stealing jobs from Americans; they are creating more opportunities for economic growth.
In the last year business confidence has improved, investment is increasing and workers are reaping the benefits. Please don’t blow it with a trade war, Mr. President.