Sometimes, trickle-down economics works. Perhaps not with the stock market, where surging prices tend to benefit already-wealthy investors. But when the job market booms, so do the fortunes of those on the lower rungs of America’s labor ladder.
The US labor market has been booming, adding 157,000 jobs in July, according to the latest data from the Labor Department. That wasn’t quite as robust as analysts hoped, but it kept alive a streak of monthly job increases going all the way back to the fall of 2010.
Other takeways from Friday’s report: The unemployment rate dropped back below 4 percent, eager part-time workers seem to have moved into full-time gigs, and, thanks to revisions, it turns out the economy created tens of thousands more jobs than originally reported in May and June. All told, another solid month in an economic recovery that may be long in the tooth but shows little sign of weakening.
For less-educated workers, these July numbers were something more than solid: They were record-setting.
The unemployment rate for Americans without a high school diploma dropped to 5.1 percent, the lowest level since the Labor Department started keeping track in 1992. The same can’t quite be said for high school grads — their unemployment rate is still above the 3.2 percent level of the dot-com years — but they, too, have enjoyed some substantial job-market gains in recent months.
One narrow reason for the prosperity of non-college-educated workers is that they are vital to some of the industries that happen to be flourishing at the moment. These include manufacturing, construction, and transportation, all three of which have posted consistent job gains over the past year (though transportation and warehousing jobs were down a bit in July).
When these industries expand, it creates new opportunities for truckers, roofers, assembly-line workers, and other less-educated folks.
This is exactly what you would expect in a high-octane economy. After all, the reason construction and transportation firms are doing well is because companies and households have money to spend on new buildings, renovations, and all manner of goods (which need to be shipped around).
And with the overall unemployment rate nearing 50-year lows, employers don’t have a lot of options when it comes to finding workers. Even if they would prefer to hire college grads, most of those folks already have work. Which leave high school grads, and even people who didn’t finish high school, as the best — sometimes only — option.
With more job opportunities should come higher wages. That link isn’t guaranteed, especially as overall wage growth has been tepid throughout the economic recovery. But in fact, less-educated workers not only enjoyed the fastest wage gains in 2017, they were the only cohort that received any wage gains at all, as college-educated workers actually saw their wages drop, according to an analysis from the Economic Policy Institute.
Still, it’s not all good news for less-educated workers. The flip side of their current good fortune is that when the next recession does come, they are likely to suffer most.
That’s what happened last time, when the unemployment rate for high school grads jumped from 4.5 percent to 11 percent at the nadir of the recession — even as the unemployment rate for college grads maxed out at 5 percent.
Up or down, they are more vulnerable to the vicissitudes of the US economy, thriving when the labor market is tight, struggling mightily when it’s not.
Which is why full employment is such an urgent goal for the US economy: It’s central to economic equity. And also a big reason advocacy groups are increasingly focused on the makeup and activities of the Federal Reserve.
More than anyone else, it’s the Fed that oversees the US job market, deciding when to push the unemployment rate down and when instead to let it rise, using the sometimes-crude tool of interest rates.
Pushing the Fed in a different direction — with members more willing to watch companies compete aggressively for workers, even at the risk of inflation — could have a big impact not just on the economy as a whole, but on the prospects for America’s most vulnerable workers.