The job growth rate bounced back somewhat following a lackluster month by reaching 164,000 new jobs in April, detailed a federal report Friday.
The Bureau of Labor Statistics (BLS) releases a monthly report which breaks down labor market trends like employment growth. The previous monthly report showed a slowdown in employment growth at 103,000 new jobs. The BLS has been tracking fairly steady employment growth overall in recent years.
“Total nonfarm payroll employment increased by 164,000 in April, and the unemployment rate edged down to 3.9 percent,” The BLS reported states. “Job gains occurred in professional and business services, manufacturing, health care, and mining.”
The unemployment rate fell down to 3.9 percent- its lowest point since 2000. It was been at 4.1 percent for the last several months. Employment growth over the past couple of years has tended to be closer to 200,000. The slowdown last month followed an increase in employment growth that managed to reach 313,000 new jobs.
President Donald Trump entered office early last with the economy already showing strong gains. The Great Recession that hit nearly a decade prior was followed by an unusually sluggish recovery that still persists somewhat. But in the last few years, the economy has strengthened considerably, which the president has worked to improve on even more.
“The last year for the labor market has been really good,” ZipRecruiter chief economist Cathy Barrera told InsideSources. “Getting that unemployment rate down near four percent and the number of jobs that have been added to the economy each month have been really great indicators for the labor market.”
Trump has made regulations and taxes critical components of his economic agenda. He was able to implement a massive overhaul of the tax code and reductions to many regulations and federal rules. His hope is to decrease tax and regulatory burdens so employers have more time and resources to invest into their businesses and employees.
The BLS report also found that average wages increased by four cents and now sit at $26.84 for the month of April. Average hourly earnings increased by 2.6 percent over the year. The smaller pool of available workers usually leads to increased wages because companies have to compete to hire people. Wage growth did pick up somewhat last month but it still remains sluggish.
“The populations that are filling those jobs will tell us something about what we should expect in terms of wage growth,” Barrera said. “Since these are jobs at the lower end of the pay scale, some of them would be entry-level jobs, it’s unlikely that this type of hiring will put a lot of upward pressure on wage growth.”
Barrera adds that there has not been a lot of movement when it comes to job turnover either which could negatively impact wages. Workers often seek higher wages when they change jobs, but since there hasn’t been much movement on that front it could mean less growth. It might also indicate that more people are being pulled into the labor market.
“It would seem as employers add roughly 200,000 jobs to the economy each month, that they’re now tapping into populations that might not have been their first go to for a job candidate than say a year ago,” Barrera said. “So we’re starting to see an uptick in the labor force participation rate for people who have lower levels of education.”
Barrera adds that it is also younger people who are new to the workforce that are seeing more opportunities as well. This also impacts wages in another way as the pool of available workers might not be as tight as it appears since the unemployment rate doesn’t track people who have fallen out of the labor market because of long-term joblessness.
The labor force participation rate, in contrast, tracks the number of employed and those actively seeking work as a percentage of the total population. It fell considerably since the last recession before bottoming out near the current rate of 62.8 percent percent. It has shown some slight increases in recent months.
“That has been pretty much flat since the beginning of 2014,” Florida State University Prof. Randall Holcombe told InsideSources. “It’s leveled off but it hasn’t picked back up. It would be interesting to see if that changes but so far we’ve had several years where its been pretty constant.”
The low participation rate can be blamed somewhat on the large population of retirees and student adults. The employment-to-population ratio for prime-age adults has shown a lot of improvement but still hasn’t reached where it was before the recession. That could potentially mean there are plenty of more people that can be pulled into the workforce.
“This is an interesting recovery from a labor market perspective,” Ohio University Prof. Richard Vedder told InsideSources. “The standard traditional measures like the unemployment rate, we’re not at an all-time low of course, but we’re very close to it. And we’ve seen an uptick in the labor force participation rate and the unemployment-population ratio, which is a statistic I’ve been looking at more in recent years. But we’re still not where we were in the year 2000.”
The labor force participation rate was already declining when the recession caused it to suddenly drop. It began falling after several years of steady growth in 2000. A large number of retirees could make it difficult to return to that point, but many economists believe there is still plenty of potential for growth.
“So we still have, by the standards of a generation ago, some potential growth in the labor market and it will be interesting to see whether that evolves,” Vedder said. “We do have opportunities for people to earn income who are not working to a greater extent than what was true a generation ago.”
President Trump is aiming to get the economy at least growing at a consistent three percent. The Gross Domestic Product (GDP) tracks the total dollar value of all goods and services produced over a specific time period and is a commonly used measure to determine the economic performance of a country or region.
“We have had some improvement in the last year,” Vedder said. “The three percent growth ideal seems plausible right now. It was never achieved at all by Obama. I think the highest GDP annual growth in the Obama years was about two and a half percent. They never reached three percent.”
The Bureau of Economic Analysis (BEA) found in a report April 27 that economic growth increased at an annual rate of 2.3 percent in the first quarter of 2018. The previous reports found that economic growth increased by 2.9 percent in the fourth quarter, 3.2 percent in the third quarter, and 3.1 percent in the second quarter of last year.
Trump has seen a notable increase in economic optimism since he began implementing his agenda. But even supporters have expressed concern over some of his policies like trade and immigration. His proposed tariffs were met with backlash from the business community and a short-lived dip in the stock market.