Labor Force Growing At Frantic Pace Economics Experts Wonder How Long It Can Keep Up
The hailstorm that did so much damage to roofs a little more than a year ago pulled Antonio Rodriguez into the labor force. Kneeling on the lawn in front of a white, clapboard home recently, he cut strips of asphalt into shingles while four other young men lugged the shingles up a ladder and nailed them in place. Soon after, the team moved on to the next damaged roof.
Rodriguez immigrated from Mexico and settled here five years ago, but making a living came hard. Stints as a day laborer alternated with longer periods of idleness in which he rarely even looked for a job.
“My friends offered me work sometimes,” he said. And then a year ago, the hailstorm, and the prospering Kentucky economy, brought Rodriguez full blast into the labor force.
For 18 months now, the U.S. labor force, which is everyone working or actively seeking work, has been growing at nearly twice its normal rate and more than double the growth rate of the working-age population.
That has fed about 4 million more people into a growing economy. Hispanic people are the biggest contingent, but younger women and men over 55 also figure prominently among the new entrants.
Many are being pulled into the work force by employers who are offering better pay than the minimum wage and - with the unemployment rate hovering at 5 percent or below - are less choosy than they once were about whom they hire. Mostly the new people are entering at relatively low pay, like Rodriguez, who is earning $50 a day.
Companies are recruiting among those ignored in the past: mothers at home with their children, older men who had retired or been laid off, students, immigrants, people with criminal records.
State officials in Kentucky who help former prisoners get jobs say companies now reject fewer convicted felons. And tens of thousands of welfare recipients are being pushed off the rolls and into work by changes in the federal welfare system.
“There is a huge and chronic reserve of working-age people in this country,” said Mark Zandi, chief economist at Regional Financial Associates, “and when conditions are right, or they are pushed, they come into the labor force. That is happening now.”
One of the big national economic issues is how long the U.S. labor force, now numbering 129.4 million workers and 6.8 million people actively seeking work, can continue growing at this faster rate of 2 percent a year.
During the 1980s, similarly strong laborforce growth started shortly after the recovery began and lasted for five years, helping to keep the economy expanding without the inflation that can result from labor shortages. This time the abovenormal labor-force growth kicked in only during the fifth year of recovery, and could continue to the end of the century.
“Millions of people are out there willing to enter the labor force without bidding up wages very much,” said Alan Krueger, a Princeton labor economist. “This implies that the unemployment rate can remain low without the inflation that usually accompanies low unemployment.”
Much of the labor-force growth is in Eastern states, with their big concentrations of immigrants and people on welfare, and in prospering Southern states like Kentucky that are producing many new jobs.