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Unemployment Below 4 Percent in US – What does it mean ?

Job creation is increasingly limited not by employers’ optimism or confidence or so-called animal spirits, but on the hard limit caused by the finite number of humans to fill those jobs.

And so the focus of policy seems as if it should be less on creating more jobs and more on trying to make the jobs that exist as good as possible, on all dimensions.

For workers, that means higher wages, and the April numbers were actually a bit disappointing on that front. Average hourly earnings for private-sector workers rose only 0.1 percent, and they have been up 2.6 percent over the last year. While there has been some fragmentary evidence that employers are starting to raise wages because of the tight labor market, it isn’t yet clear that there is some overwhelming trend toward workers fully sharing the benefits of an improving economy.

The low unemployment rate means that the still-depressed levels of participation in the work force are hard to chalk up to a shortage of jobs.

Only 79.2 percent of Americans 25 to 54 were working in April, unchanged from March. That number was 81.4 percent the last time the unemployment rate was at its current levels in December 2000.

That means that there are still around 2.3 million people in the United States of prime working age who might come back into the labor market if we were to match the standard from 18 years ago. Higher wages would most likely help, but it would also help to understand better the noneconomic reasons those people aren’t working and how these might be overcome.

Chosen excerpts by Job Market Monitor. Read the whole story at The Jobless Rate Is Finally Below 4 Percent. Our Economic Goals Still Don’t Reflect That. – The New York Times

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