Home' Trinidad and Tobago Guardian : July 4th 2015 Contents A18
Guardian www.guardian.co.tt Saturday, July 4, 2015
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WASHINGTON---Even after another month
of strong hiring in June and a sinking unem-
ployment rate, the US job market just isn t
what it used to be.
Pay is sluggish. Many part-timers can t
find full-time work. And a diminished share
of Americans either have a job or are looking
Yet in the face of global and demographic
shifts, this may be what a nearly healthy US
job market now looks like.
An aging population is sending an outsize
proportion of Americans into retirement.
Many younger adults, bruised by the Great
Recession, are postponing work to remain
in school to try to become more marketable.
Global competition and the increasing
automation of many jobs are holding down
Many economists think these trends will
persist for years despite steady job growth.
It helps explain why the Federal Reserve is
widely expected to start raising interest rates
from record lows later this year even though
many job measures remain far below their
"The Fed may recognise that this is a new
labor-market normal, and it will begin to
normalise monetary policy," said Patrick
O Keefe, an economist at accounting and
consulting firm CohnReznick.
Thursday s monthly jobs report from the
government showed that employers added
a solid 223,000 jobs in June and that the
unemployment rate fell to 5.3 per cent from
5.5 per cent in May. Even so, the generally
improving job market still bears traits that
have long been regarded as weaknesses.
A shrunken labour force
The unemployment rate didn t fall in June
because more people were hired. The rate
fell solely because the number of people who
had become dispirited and stopped looking
for work far exceeded the number who found
The per centage of Americans in the work-
force --- defined as those who either have a
job or are actively seeking one --- dropped
to 62.6 per cent, a 38-year low, from 62.9
per cent. (The figure was 66 per cent when
the recession began in 2007.) Fewer job hold-
ers typically mean weaker growth for the
economy. The growth of the labour force
slowed to just 0.3 per cent in 2014, compared
with 1.1 per cent in 2007.
"It is highly unlikely that we are going to
see our (workforce) participation rate move
anywhere near where it was in 2007," O Keefe
This marks a striking reversal. The share
of Americans in the workforce had been
steadily climbing through early 2000, and a
big reason was that more women began
working. But that influx plateaued in the
late 1990s and has drifted downward since.
The retirement of the
vast baby boom generation
The aging population is restraining the
growth of the workforce. The pace of retire-
ments accelerated in 2008, when the oldest
boomers turned 62, when workers can start
claiming some Social Security benefits. Econ-
omists estimate that retirements account for
about half the decline in the share of Amer-
icans in the workforce since 2000.
From that perspective, the nation as a
whole is beginning to resemble retirement
havens such as Florida. Just 59.3 per cent of
Floridians are in the workforce.
Younger workers are
starting their careers later
Employers are demanding college degrees
and even postgraduate degrees for a higher
proportion of jobs. Mindful of this trend,
teens and young people in their 20 s are still
reading textbooks when previous generations
were punching time clocks.
The recession "basically told everybody
that they need an education to get better
jobs," says John Silvia, chief economist at
Wells Fargo. "So how would young people
respond? They stayed in school."
Fewer than 39 per cent of 18- and 19-
year-olds are employed, down from 56 per
cent in 2000. For people ages 20 to 24, the
proportion has fallen to 64 per cent from 72
The number of part-timers who would
prefer full-time work remains high
About 6.5 million workers are working
part time but want full-time jobs, up from
4.6 million before the recession began. This
is partly a reflection of tepid economic
growth. But economists also point to long-
term factors: Industries such as hotels and
restaurants that hire many part-timers are
driving an increasing share of job growth,
researchers at the Federal Reserve Bank of
San Francisco have found.
As more young adults put off working,
some employers are turning to older workers
to fill part-time jobs. Older workers are more
likely to want full-time work, raising the
level of so-called involuntary part-time
Many economists also point to the Obama
administration s health care reforms for
increasing part-time employment. The law
requires companies with more than 100
employees to provide health insurance to
those who work more than 30 hours.
Michael Feroli, an economist at JPMorgan
Chase, says this could account for as much
as one-third of the increase in part-time
Weak pay growth
The average hourly US wage was flat in
June at US$24.95 and has risen just 2 per
cent over the past year. The stagnant June
figure dispelled hopes that strong job growth
in May heralded a trend of steadily rising
In theory, steady hiring is supposed to
reduce the number of qualified workers who
are still seeking jobs. And a tight supply of
workers tends to force wages up.
Yet a host of factors have complicated that
theory. US workers are competing against
lower-paid foreigners. And automation has
threatened everyone from assembly line
workers to executive secretaries.
Still, economists at Goldman Sachs forecast
that average hourly pay will grow at an annual
pace of about 3.5 per cent by the end of
2016. That is a healthy pace. But it will have
taken much longer to reach than in previous
Job market's new normal:
Smaller workforce, sluggish pay
Employers are demanding college degrees and even postgraduate
degrees for a higher proportion of jobs. Mindful of this trend, teens
and young people in their 20's are still reading textbooks when
previous generations were punching time clocks.
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