Unemployment falls again as labor force participation rate drops – but wages continue to grow slowly for most American workers
The US unemployment rate fell to 3.9% in April, its lowest rate since December 2000, as employers stepped up hiring, modestly adding 164,000 jobs over the month.
Although many employers now say it’s difficult to find qualified workers, they have yet to significantly bump up pay in most industries. Average hourly earnings rose 2.6% from a year ago, slightly below expectations.
The fall in the unemployment rate was also boosted by a drop in the labour force participation rate – the percentage of people who are currently employed or in search of a job. The participation rate dipped for the second straight month to 62.8% in April, near to levels previously seen in the 1970s.
Job gains occurred in professional and business services, manufacturing, health care, and mining, the labor department announced. Employment in professional and business services increased by 54,000. Employment in manufacturing increased by 24,000 in April.
On Twitter, Donald Trump celebrated the news and attacked his critics as his presidency becomes ever more mired in controversy. Trump wrote: “JUST OUT: 3.9% Unemployment. 4% is Broken! In the meantime, WITCH HUNT!”
The US has now added an average of 200,000 new jobs a month this year, continuing a record nine-year streak of month-on-month job gains.
But despite these gains, wage increases have barely kept pace with inflation.
“The big news in this morning’s jobs report is that the unemployment rate edged down to 3.9%, the first time it has gone below 4.0% since 2000,” Elise Gould, a senior economist at the Economics Policy Institute, wrote in a blogpost.
“Unfortunately, this dip was accompanied by a fall in labour force participation. In other words, it fell for the wrong reasons – not because of a surge in the number of people getting jobs, but because of a rise in the number of people out of the labor force. The labor force participation rate and the employment-to-population ratio ticked down 0.1 percentage points.
“Notably, nominal wage growth continues to fall short, rising only 2.6% over the year. This is clear evidence that despite the low unemployment rate, the economy is not yet at full employment.”
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