The Fourth of July is a vibrant time during the summer when families unite to celebrate the birth of a country. And it’s not just any country, but in my opinion the best country in the world: The United States of America! One aspect regarding America’s greatness is its ability to establish policies that support America’s workers.
In May 2019, for example, the unemployment rate fell to 3.6 percent, which is the lowest level since 1969 as reported by the Bureau of Labor Statistics. “Hispanic-Americans and Americans with disabilities maintained their series low unemployment rates at 4.2% and 6.3%, respectively. At 3.1%, wage growth continued a 10-month streak of being at or above 3.0%, which remains encouraging.” However, the unemployment rate this low brings a mixed bag of findings. The following is a summary of Paul Davidson’s findings from USA Today
Why is it good?
What does a low unemployment rate mean? It means there are fewer available workers for each job opportunity. This provides leverage for job hunters and gives all American workers more opportunity.
Also, a lower unemployment rate compels employers to raise pay to attract more qualified applicants and retain current employees. Although pay has not increased as experts expected; however, with the unemployment rate dropping below 4 percent, wages are anticipated to rise sharply ultimately placing more money in job seekers’ pockets. So, it’s a great time to look for employment!
Okay, why is it bad?
With more limited availability of workers, businesses can’t always satisfy the demand they are seeing from customers. It may seem great from a business standpoint; however, it could mean slower economic growth when companies are not meeting product and service expectations. Usually, slower growth translates into less hiring by companies.
Contributing factors to the lower unemployment rate may not seem all that good when you look at the statistics in greater detail. As a result of Baby Boomers (persons born between 1946 and 1964) retiring from work, the unemployment rate fell because there were 236,000 fewer people in the labor force (defined as job seekers that are working or looking for work). It would be a sweeter story to tell if those numbers included those that obtained employment which is an example of a healthy job market.
As wages increase due to the lower unemployment rate, the Federal Reserve might attempt to raise interest rates to prevent inflation in the price of goods and services. This type of inflation is called wage-push inflation. It is caused when companies increase the cost of goods and services in order to maintain higher wages to their employees. This is a circular dilemma because everyone wants to be paid more; however, corporations must increase their good and services to meet the increased wage demands.
This information, and more, is what Workforce Solutions refer to as Labor Market Information or simply LMI. This information is provided free of charge for job seekers in order to make the best decision possible for his/her job search. Unemployment rates are important because it can provide you with insight about how well the job market and economy is performing. You may ask yourself, “What is a high-skill-high-growth job? Should I apply for this employer or the other, or should I attend school for more education and training?” Honestly, it really depends on your unique circumstances, and where you are on your job search path. However, at least your decisions will be supported by LMI, which can contribute to your success. So, this year, let’s us not only celebrate this vibrant time with family and the birth of a country. Let us rejoice and use the information provided for your success!
Daniel Mabry is a member of the Workforce Solutions Regional Navigator team in the Houston-Galveston region. After serving in the United States Marine Corps for over 9 years, he connected with Workforce Solutions for career guidance and ended up becoming an employee. This position allows him to utilize his training and personal experience to help people experiencing homelessness.