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New York Times, May 4, 2018: Unemployment Rate Hits 3.9%, a Rare Low, as Job Market Becomes More Competitive
The official unemployment rate for April fell to 3.9 percent. That's the lowest since 2000 when the rate also hit 3.9 percent, but you have to go back to 1970 to find a rate lower than 3.9 percent. The last time the unemployment rate remained below 4 percent for a sustained period was in the late 1960s.
The jobless rate for black workers was 6.6 percent in April, the lowest level on record (Trump touts this number as a victory for him), but still much higher than the 3.6 percent for whites.
If you include people who had given up looking for work, the unemployment rate is 7.8 percent, a level not seen since 2001.
164,000 jobs were added in April, falling below the Wall Street economists expectation of about 193,000.
The numbers , of course, are subject to later refinement and revision as is often the case. The Labor Department revised the job figures for February slightly downward, but revised the numbers for March sharply upward, resulting in a net increase of 30,000 jobs for those two months compared with previous estimates.
Average earnings rose by 4 cents an hour last month and are up a modest 2.6 percent over the past year. Wage growth is not picking up as one would expect for these historically low unemployment numbers.
I will make a few observations on the numbers.
1. There is wage growth in some sectors but not in others reflecting the disparities and inequalities in the economy both geographically and demographically. We've discussed that in other threads in the past, and in addition to education, age is one of the significant demographics.
2. The uncertainty of what the Trump's actions including tariffs will do to the economy has many employers moving more cautiously on wage hikes. Some are giving one time bonuses instead of wage hikes.
3. Globalization is here to stay, and US wages are more and more linked to the competitiveness of the global market. In particular, the strong dollar is hurting global competitiveness. The US dollar is stronger than its been in the last 13 years.
4. The baby boomer effect is not talked about much (except by me). For the baby boomer generation (those of us born between 1946 and 1964) we are indeed retiring at increasing rates. We can retire and grab our social security benefits as early as age 62 (with reduced benefits), take full retirement benefits at age 66, or work until age 70 for increased benefits. If we wait until 70, our monthly benefit will be 32% higher than it would be at 66 and a staggering 76% higher than it would be at 62.
So there are definite monetary benefits to delay taking social security benefits until age 70, but nothing beyond age 70. Those of us baby boomers born in 1946 and 1947 have turned 70 either last year or this year. I haven't seen any statistics on the numbers, but it would seem to me that many of those born in those years and who postponed retirement will now be leaving the work force for good. Those numbers are reflected in part in the 3.9 percent unemployment rate.
Furthermore, as us seniors retire from the work force, we are replaced by younger workers at considerably lower salaries, and that factor can contribute in part to the anomaly of low unemployment but apparent stagnant "average" wages.