The labor market is wringing out the last of long-persistent slack.
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The unemployment rate fell in April to a seasonally adjusted 4.4%, matching the lowest level since the 2001 recession, the Labor Department said Friday.
Businesses across an array of industries are struggling to find workers, and in some cases have started to raise wages at a faster clip, especially for specialized jobs.
"The job market is getting tighter," said Kate Warne, an economist at Edward Jones. "As we get closer to full employment, businesses will need to pay more for workers."
Full employment is seen by economists as the point where people who want jobs have them, and the unemployment rate largely reflects the natural month-to-month churn of the labor market as people exit and re-enter the workplace.
In 2009, the end of the most recent recession, more than 15 million Americans wanted jobs and couldn't find them. Businesses had ample choice of experienced workers and didn't have to outbid competition to hire them. Now the number of unemployed has fallen by more than half, to 7.1 million, and an increasing share of those have been out of work for three months or less, as opposed to being unemployed for long periods.
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The Fed's survey of regional economies last month noted firms are reporting higher turnover rates and more difficulty holding on to workers in industries ranging from hospitality to manufacturing to energy. Construction firms in Memphis, Tenn., and Little Rock, Ark., reported labor shortages caused employers to raise wages to attract employees.
Average hourly wages rose 2.5% from a year earlier in April. That was a slowdown from December's recent peak of a 2.9% annual gain, but still among the best annual raises recorded since the recession.
Still, recent gains remain historically low. In the 20 years before the most recent recession, wages routinely grew better than 3% annually. One factor that may be skewing the interplay between labor-market slack and wages is global competition. U.S. workers now compete not just with each other, but also with those in Germany, China and Mexico.
As wages have ticked up, so have modest price pressures. Consumer prices rose 2.4% in March, from a year earlier, the Labor Department said. That means many workers with bigger paychecks are taking home little more, after accounting for inflation's effects.
NCGS Inc., a Charleston, S.C., company that runs clinical trials for drug companies, is now reviewing employees' compensation as frequently as every three months, versus the prior practice of annual reviews.
"You can't wait to evaluate salaries," Chief Executive Nancy Snowden said. "That doesn't exist anymore because there's so much competition."
The company is undertaking the largest expansion its 33-year history and doesn't want to lose critical talent. Average salaries at NCGS are up about 8% from a year ago. In-demand jobs include clinical nurses and regulatory-compliance experts.
Write to Eric Morath at email@example.com
(END) Dow Jones Newswires
May 05, 2017 13:49 ET (17:49 GMT)