The Star Tribune Editorial Board has fretted frequently about the labor shortage in Minnesota. Today we take an opportunity to celebrate a less-noticed corollary with a decided upside: There has seldom been a better time to go job hunting, particularly for new graduates and entry-level workers.
After many recessionary years of clawbacks and wage reductions when the employed were grateful even to have jobs, job seekers now find employers fighting to hire them. Wages are inching up — not enough, and not in all sectors, but it’s happening. Earlier this year a survey by the National Federation of Independent Businesses showed that more than 30 percent of small businesses reported paying higher wages. Average U.S. hourly pay has risen nearly 3 percent, the biggest jump in nearly a decade.
To their delight, students looking for summer jobs have found plenty, many paying well above minimum wage and some even accompanied by modest benefit packages.
Particularly for workers just starting out, this may be the best labor market since the 1990s, said Steve Hine, director of labor market information for the Minnesota Department of Employment and Economic Development. “We’re at 3.1 percent unemployment. For workers, we’re moving into a sellers’ market in a way we haven’t seen before.”
Hine sees that trend continuing, if only because baby boomers are close to hitting peak retirement rates, due in 2020. That will leave employers scrambling to fill jobs at every level, he said, creating movement and opportunity across the labor market.
There is always tension between those who seek jobs and those who employ them. Employers want the broadest possible selection, understandably. Mindful of costs, they are frugal with the ongoing expense raises and benefits represent, which rises with full-time, as opposed to part-time, workers.
The balance tipped too far in recent years. The increasingly common practice of putting workers on call has too many constantly checking to see whether their schedules have changed, leaving them unable to plan their nonwork lives. Productivity gains have not resulted in commensurate wage increases for workers. Higher education was meant to open doors, but recently has closed some, because too many employers use it as a sorting tool, requiring degrees even for jobs that could easily be performed with a bit of training.
Some of those conditions may be easing or even reversing now, as the marketplace adjusts to a smaller workforce and employers become accustomed once again to competing for the best workers.
That healthy development could benefit many in an economy where some have felt left behind even in the midst of one of the longest expansions on record. During the last recession, black unemployment stubbornly hovered in the 20 percent range and higher, according to state labor statistics. A year ago it fell to 8 percent. Now, Hine said, it’s 6.1 percent. It should be noted that this is still far higher than the white unemployment rate of 2.6 percent, but the improvement has been dramatic. “The best antidote for disparities may, in fact, be a strong labor market where workers are at a premium,” Hine said. Will that displace the need for vigilance on racism? No. But it shows that gains can be made.
There’s been another change to the economy, barely noticed so far. The so-called gig economy that experts once predicted would replace permanent jobs appears to have retreated to niche status. According to a Bureau of Labor Statistics survey, workers in “alternative employment arrangements” amount to about 10 percent — a figure that has barely budged since 1995.
Of course, it’s not all good news. St. John’s University economist Louis Johnson notes that not everyone has benefited. Workers in the metro area have far more choices than those in some parts of greater Minnesota, where good jobs can remain scarce and employers that dominate a city or region have reduced incentives to raise wages. Johnson said some small and midsize manufacturing companies also are constrained by globalization. “They can’t just raise their prices to the point where they can offer higher wages because they’re competing against firms in Asia and Eastern Europe. It’s not as easy to pass the costs along.” Low interest rates have also made investments in automation more attractive to some employers.
A prolonged trade war could easily change conditions again, even throwing the economy into another recession. Too severe a labor shortage can hinder economic growth. But for now, workers appear to have regained a bit of leverage.
“If the current conditions persist and we don’t go into a deep trade war,” Hine said, “we could anticipate the first real balance of power shift to the worker side of the equation that we’ve seen in a long time.”