U.S. Added 223,000 Jobs in May; Unemployment at 3.8%

Most economists expect the momentum to continue, although the further drop in the unemployment rate and the healthy increase in average hourly earnings may well stoke fears of inflation and, in turn, a more hawkish Fed.


A jobs fair last month in Holmdel, N.J., viewed from the township library. Better weather and data on income and spending lifted expectations for stronger employment gains in May than in previous months.

Stephen Speranza for The New York Times

Wages, Wages, Wages

Diane Swonk, an economist with Grant Thornton, said the great conundrum in the current economic environment was why wage growth had been so modest. After all, a tighter labor market should prompt employers to raise salaries to keep the workers they have and lure new ones, right?

In theory, yes, but in practice it hasn’t been working out that way — and everything from slow productivity growth to the decline of unions and digital disruption has been cited as a reason.

“This is the last shoe to drop in the labor market,” said Torsten Slok, chief international economist at Deutsche Bank. “It’s just a matter of time before wages start going up more strongly, but there’s frustration that it hasn’t happened yet, even though unemployment is the lowest it has been in almost 18 years.”

Besides the other potential causes, Mr. Slok has one of his own: While job switchers are being rewarded with raises, people who stay where they are not. Nearly 15 percent of what he calls “job stayers” saw no increase in wages in the past 12 months. At comparable periods in past economic cycles, that share was more like 10 percent.

“If you just stay around, you have less bargaining power,” Mr. Slok said.


People discussing job opportunities at the George Washington Bridge Bus Station in Upper Manhattan, where new stores are opening.

Gregg Vigliotti for The New York Times

Back From the Sidelines?

Although the proportion of Americans in the job market fell slightly in May, economists are looking for signs that workers who had given up on finding a job are gradually coming back. The labor participation rate was 62.7 percent last month, compared with 62.8 percent in April.

Sectors like construction, energy, transportation and hospitals have been especially tight, Ms. Swonk said, with some employers offering signing bonuses to lure workers. For evidence of the trend, she is watching teenage unemployment, which was 12.8 percent last month. In April, it stood at 12.9 percent, down from 14.7 percent in April 2017.

In some regions, labor markets have gotten especially tight, forcing companies to pony up to compete for workers. Union Pacific, the railroad giant, has long struggled to find mechanics, electricians and other skilled trade workers. But now it is having trouble filling even unskilled positions in some areas.

In Council Bluffs, Iowa, where the unemployment rate is under 3 percent, Union Pacific has started offering $20,000 in hiring incentives for train crews — a job requiring no experience or education beyond a high school diploma. In some cases, the company isn’t even waiting for students to graduate to start the recruiting process.

“We have communities where we work where the unemployment rate is a percent and a half,” said Lance Fritz, Union Pacific’s chairman and chief executive. “Finding people to do work there is mostly about getting them in high school and making them aware of the career path so that when they graduate and are in the work force, we get them.”

Turning to Trucking

When Chris Bogan was laid off last fall by Appleton Coated, a Wisconsin paper mill, he feared the worst. As his family’s main breadwinner, he was earning $28.66 per hour, a solidly middle-class wage in the Neenah, Wis., area, which The New York Times reported on in November.

As it turned out, tightness in one of the industries recently cited in the Fed’s Beige Book economic survey — trucking — came to Mr. Bogan’s rescue. The day the mill shut, he signed up for a course at Fox Valley Technical College to get a license to drive trucks. And the day after he graduated, he landed a job at a local trucking company.

“I didn’t wait around,” Mr. Bogan said. “I graduated on a Thursday night and went to the trucking company office on Friday morning.”

The demand for workers that he encountered is part of the larger economic picture in Wisconsin, which boasts one of the nation’s lowest unemployment rates. The jobless rate there stands at 2.8 percent, down from 3.3 percent a year ago.

Indeed, after the mill resumed production and Mr. Bogan got a call asking if he’d like to come back, he politely declined. Under a Teamsters union contract, Mr. Bogan’s employer covers all of the cost of his health insurance, so he’s essentially earning the same take-home pay as before.

“Things are going pretty well,” he said. “I love it. Instead of just watching that machine turning, I’m outside, and it’s different every day.”

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U.S. Unemployment Falls to 3.9%, Lowest Since 2000

But the future has become clouded as President Trump continues to flirt with a trade war. The White House has offered little clarity about whether its newly imposed steel and aluminum tariffs will extend to allies like Mexico, Canada and the European Union, and it seems no closer to smoothing over economic tensions with China.


A worker conducting a test at a CP Industries plant in McKeesport, Pa., which makes steel cylinders to store gases at high pressure. Tariffs on steel and aluminum from China will make raw materials more costly, which has clouded the prospects for extending the nation’s job growth.

Ross Mantle for The New York Times

Economists say it is too soon to tell how employers may change their staffing or expansion plans in response to the tariffs on Chinese goods, or to Beijing’s retaliation. But there are signs that companies that buy metals are feeling the effects already. The Institute for Supply Management said this week that manufacturing activity grew in April at its slowest pace since last July.

Uncertainty over the price of raw materials could prompt factories to cut back from their recent hiring spree. Manufacturers added 73,000 jobs in the first quarter, much more than in the same period last year.

Wages and the Fed

Economists expect that low unemployment will lead to increasingly big pay bumps for workers as employers fight over a dwindling number of candidates. But this recovery has so far bucked that conventional wisdom. The change in hourly earnings varied from month to month last year, but hovered around 2.5 percent, barely keeping up with inflation.

A year-over-year increase of 3 percent in hourly earnings is considered the trip wire that could prompt the Federal Reserve to raise its benchmark interest rate more aggressively than it has signaled.

“Wage growth picking up would suggest the labor market is tightening and that the Fed could have to move more aggressively,” said Matthew Luzzetti, a senior economist at Deutsche Bank. Projections released at a Fed meeting this week suggested that officials were leaning toward a total of three rate increases this year. But strong wage growth could fan fears of an uptick in inflation, pushing them toward a fourth increase, Mr. Luzzetti said. “It means borrowing costs will be moving higher for typical consumers.”

Who’s Been Left Out

The good times have been better for some than for others. Some Americans are still hesitating to enter the job market, perhaps because they remain bruised from the particularly harsh recession a decade ago.

“We have realized that there were even more workers on the sidelines than we previously thought,” said Martha Gimbel, an economist at Indeed.com, a job-search site. She pointed to data showing that more people are working part time, or have been unemployed for a long stretch, than in the last expansion. Ms. Gimbel said that her site had seen an increase in people searching for things like “background check” and “full time,” which could indicate that the economy’s strength is coaxing more people into the working world.

But for some groups, the market has been tougher. The unemployment rate for black workers, for example, has consistently hovered well above the rate for white workers, even as employers complain loudly about a labor shortage in sectors like construction and trucking. The job market has improved for black workers in recent years. But they still faced a jobless rate of 6.6 percent in April, compared with 3.6 percent for whites.

If the numbers were reversed, “the country would be up in arms,” said Andre Perry of the Brookings Institution, whose research focuses on race and structural inequality. Differences in education or degrees don’t explain that gaping disparity, according to federal data.

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When the Elderly Call for Help, a ‘Chain’ Immigrant Often Answers

But economists do not necessarily agree.

Those who study immigration and labor patterns have questioned the wisdom of restricting family-based immigration, a crucial source of low-skilled workers, many of whom hail from countries like Mexico and the Philippines, where Ms. Mangayan, 47, is from.

“In any plausible future scenario, the U.S. needs far more new low-skilled workers than high-skilled workers,” said Michael Clemens, an economist at the Center for Global Development, a Washington think tank, “so many that it will be impossible for native labor to fill all those jobs, even if native workers wanted to.”

According to a Bureau of Labor Statistics analysis, among the 10 occupations expected to grow the most through 2026, only three require university degrees, all of them digital or data-focused: software developers, statisticians and mathematicians.

The two that will require the most new workers: personal care and home health aides, with 1.2 million new positions between them.

About 10,000 baby boomers turn 65 every day, and more than half will need long-term care, according to the Pew Research Center. Already, home-care agencies and elderly-care facilities are struggling to recruit.

“If one of our aides is sick or has an emergency, it’s very difficult to find a backup,” said Kevin Smith, the president of Best of Care in the Boston area, who taps into the large Haitian and Brazilian communities in Massachusetts.


Ms. Mangayan, who married an American and is now a citizen, earns $29,000 a year taking care of elderly residents.

Jenna Schoenefeld for The New York Times

In 2017, 26 percent of personal care aides and home health aides were foreign born, a high, according to an analysis of official data by Brian Schaitkin, a senior economist at the Conference Board. In New York, 62 percent of home aides were foreign born. In California, Massachusetts and New Jersey, foreigners represented nearly half of them.

Lupe Mercado, a Mexican immigrant who works for an agency called 24Hr HomeCare in Los Angeles, has endeared herself to clients with dementia who initially cursed and flung food at her. One of them recently died holding her hand, Ms. Mercado noted, brandishing a picture of the woman on her cellphone.

On a recent afternoon, she doted on Olive Tanaka, 92. “I’m spoiled by her,” said Ms. Tanaka, a line dancer in her day who is now widowed, blind in one eye and needs round-the-clock care since suffering a fall.

Having entered the United States illegally, Ms. Mercado benefited from a 1986 amnesty law signed by President Ronald Reagan, obtaining a green card and eventually becoming a citizen.

“It doesn’t pay so much but I love my job,” said Ms. Mercado, who earns $12 an hour, and supplements her pay by taking private clients on her days off.

Proponents of restricting immigration say the low wages in her field — and in other workplaces where immigrants have a foothold, like construction, farms, and restaurant kitchens — are a prime reason immigrants have begun to supplant American workers in the jobs.

Some of those other professions, too, face worker shortages. A survey in September by the Associated General Contractors of America found that 70 percent of construction firms were having difficulty finding bricklayers, roofers and electricians, among others. Last August, the restaurant and accommodation sector had 742,000 vacancies, a historic high, according to the Bureau of Labor Statistics.

Stemming the flow of low-skilled immigrants could put pressure on employers to raise wages, compelling many Americans, including millions who are chronically unemployed, to get back to work. “It may draw all these people, or some fraction of these people, into the labor force,” posited Steven Camarota, research director of the Center for Immigration Studies, which supports curbs on immigration.

Indeed, more people would do blue-collar work they now shun if wages were higher — but not enough of them would, according to Chris Tilly, a labor economist at the University of California, Los Angeles.

“Wage is not the main issue. There are also expectations and status,” he said. “Not everybody wants to work with their hands touching people; not everybody will do dirty work.”

Supporters of an immigration overhaul cite other reasons the country should be choosier about whom it lets in. The Trump administration has also framed it as a national security issue, noting several cases where terror suspects came to the United States through family connections. Immigrants are also more likely to use welfare programs than native-born Americans, owing largely to their comparatively low skill levels upon arrival, the Center for Immigration Studies says, citing Census Bureau data.

Under a House bill introduced by Representative Bob Goodlatte, Republican of Virginia, and supported by the White House, citizens and permanent residents, or green card holders, could continue to bring spouses and children under 18 into the United States. But they would no longer be able to sponsor parents, adult children, siblings, nephews and nieces.


Lupe Mercado, a caregiver originally from Mexico, helps Olive Tanaka during a walk near Ms. Tanaka’s home in Gardena, Calif.

Jenna Schoenefeld for The New York Times

The bill would also create a point system for admission based on factors including education, English skills, and job offers in the United States, and it would cut the overall number of green cards awarded each year by half, to 500,000.

Employers who rely on immigrant labor are anxious about what will happen in Washington. Senior-care agencies in particular are worried because many are dependent on Medicaid and Medicare and so cannot, they say, easily raise wages to make their jobs more attractive to native-born workers.

If Congress makes it harder for relatives to immigrate, “Where are all these workers going to come from?” asked Patricia Will, the founder of Belmont Village, a Houston-based network of upscale facilities that employs 4,000 people in several states.

Ms. Mangayan, who makes $29,000 a year plus benefits at Belmont Village in Burbank, came to the United States in 1997 after marrying an American citizen, and she is now a citizen herself. She would have been able to immigrate under the proposed rules, though many of her co-workers would not.

Ms. Mangayan and her husband, a customer-service representative at the airport, earn enough to afford a $1,200-a-month two-bedroom apartment; their 23-year-old son’s college tuition; and occasional travel to the Philippines. Ms. Mangayan does hair to make extra money on the side.

Ms. Mangayan, who also has a 14-year-old daughter, said that one day, “I would like to have at least a condo.”

Not long after arriving for her 3 p.m. to 11 p.m. shift one recent afternoon, she was already darting from room to room.

In room 411, she improvised sign language to communicate with Bernard Bragg, an 89-year-old who achieved fame decades ago as a deaf-mute actor.

Mr. Bragg, asked what he thought of Ms. Mangayan, pointed to her, placed his hands over his heart and smiled lovingly. He then flapped his arms to suggest she was an angel.

Velma Vincent, in room 406, credited Ms. Mangayan with restoring her will to live and ability to walk after her husband died.

“I was a goner,” recalled Ms. Vincent, 88, who was resplendent in a bright-red blouse and white slacks with matching red necklace, earrings and nail polish. “Irma came in and encouraged me.”

Ms. Mangayan had coaxed Ms. Vincent to get out of her wheelchair, practice baby steps down the hall, going farther and farther each time. Soon, Ms. Vincent was mobile — and independent — with her walker, playing blackjack and Bingo, attending church and visiting Belmont Village’s beauty salon.

“My family will be forever grateful,” said her son, Bob Vincent. “that Irma emigrated from the Philippines to the United States, giving my mom a quality of life that she would not enjoy were it not for Irma.”

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