A tight labor market with a voracious demand for skilled workers has brought the unemployment rate down to a 50 year low. The 3.6% rate is the lowest on record since 1969, when U.S. companies were eagerly hiring workers and paying higher wages. Yet this time it has been different as noted by the Department of Labor, whereas higher wages haven’t prevailed as they were expected to. Suppressed wages are one of the factors that inflation has remained relatively tame and in-turn preventing the Fed from raising rates any time soon.
The drop in unemployment from 3.8% to 3.6% is also representative of a smaller workforce, where a growing number of baby boomers retire, leaving companies with minimal if any qualified workers to replace them. That dynamic is tracked by the participation rate, which has fallen to 62.8% as of April 2019, from a high of 67.3% in 2000. This means that there are fewer people willing and able to work even as companies can’t fill open positions.
Sources: Dept. of Labor
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