The May labor report showed that the American economy is booming. Strong hiring indicated that economic growth is likely to accelerate this year, after increasing at a modest 2.2 percent annual pace in the first quarter.
Employers added 223,000 jobs in May, the longest streak of job growth on record, the U.S. Labor Department said Friday, and the jobless rate fell to a seasonally adjusted 3.8 percent, the lowest since April 2000.
After the jobs report came out, forecasting firm Macroeconomic Advisers raised its prediction for second-quarter output gains slightly, to a rate of 4.1 percent. Economists have warned that further drops in unemployment or a big bump in average hourly earnings would stoke fears of inflation. This would increase the likelihood that the Federal Reserve would become more likely to raise interest rates three times more this year and four times next year.
And at least one expert, Diane Swonk, chief economist at accounting and consulting firm Grant Thornton, said on CNBC that the numbers might be deceptive: “The historically low unemployment rate … may overstate the strength of the labor market. A broader measure of unemployment and underemployment that includes Americans stuck in part-time jobs or too discouraged to look was 7.8 percent.”
But there’s no question President Donald Trump’s tax reform and deregulation have increased corporate profits and spurred more capital investment and hiring.
Furthermore, high school dropouts, blacks and Latinos, are experiencing the best labor market in 50 years. These workers who traditionally have suffered much higher unemployment rates are now benefitting from new opportunities.
We should take solace that the lowest income earners are benefitting from these economic boom times. In the first quarter of this year, median weekly earnings for Americans without a high-school diploma rose by 10 percent from a year earlier. That compared with 0.5 percent annual growth for college graduates. In another positive sign, the Labor Deparment said the number of people who have been jobless for 27 weeks or more has fallen by 476,000 in the past year. The Wall Street Journal quoted Andrew Chamberlain, chief economist at recruiting site Glassdoor: “When employers run out of workers, that’s when people with the weakest bargaining positions get put in the driver’s seat and can negotiate for better pay.”
Given the stiff competition for workers, employers have raised wages 2.7 percent in the last 12 months. Employers are complaining that they cannot find enough workers. According to the American Trucking Associations, we have a national shortage of 50,000 truckers. Truckers’ wages in some cases has soared past $100,000 annually. Chick-fil-A announced that it was raising its minimum pay to $17 per hour to reduce employee turnover. Walmart announced plans to subsidize college tuition for its employees. The Wall Street Journal reported that the tight labor market is causing Timberline Total Solutions, an Omaha, Nebraska, call center, to get more creative to attract workers without escalating wages: The company allows employees flexibility to largely pick their own schedule.
“We’ve gotten a lot of feedback that people need the flexibility to take a day off, or leave early to help their son with homework,” said Mitch Kampbell, vice president of operations.
I feel that the Labor Department numbers accurately show that our economy is booming.
But I have a major concern about something that also occurred Friday in connection with the jobs report.
President Trump, who had been briefed on the rosy employment figures Thursday night, moved markets Friday morning before the report’s public release when he tweeted that he was “looking forward” to the data. His tweet broke with decades of protocol that kept White House and other officials from publicly commenting on such market-sensitive data before its official release.
Having spent my career on Wall Street, I worry that Trump’s tweet gave inside information that could be exploited.
America enjoys the most robust markets in the world. To keep that position, the public must believe in their officials’ integrity.
Originally published in the Sarasota Herald-Tribune
