Workers Hardest Hit by Recession Are Joining in Recovery

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The least educated American workers, who took the hardest hit in the Great Recession, were also among the slowest to harvest the gains of the recovery. Now they are a striking symbol of a strong economy.

The unemployment rate for those without a high school diploma fell to 5.1 percent in July, the Labor Department reported Friday, the lowest since the government began collecting data on such workers in 1992. At the economy’s nadir in the summer of 2009, the unemployment rate for high school dropouts hit 15.6 percent, more than three times the peak unemployment rate for college graduates.

Buffeted by technological change and seemingly out of place in an economy where skills and credentials are in ever more demand, this cohort struggled while more educated workers scored jobs and promotions and rose on the economic ladder.

High school dropouts make up 7.2 percent of the labor force, and some experts doubted they and other low-skilled workers would ever fully recover from the effects of the recession, said Betsey Stevenson, a professor of economics at the University of Michigan.

“As economists, we worried these workers would be shut out forever,” she said. “But the long duration of the recovery has pulled them back in. As the economy adds more jobs, employers have had to dig a little deeper.”

The improvement in the fortunes of less-educated workers was a highlight in a jobs report that showed continuing gains across a broad variety of sectors.

Over all in July, employers increased payrolls by 157,000, while the unemployment rate edged downward to 3.9 percent, near the 18-year low achieved in May.

The data echoed other positive economic news recently, including a report last week showing the economy grew by 4.1 percent in the second quarter.

And the headlines about President Trump’s tariffs on steel and aluminum and a widening trade war with China seem to have done little to put a damper on hiring. The manufacturing sector, which is particularly sensitive to exports, was robust, adding 37,000 jobs.

Although the payroll increase in July was slightly below what Wall Street was expecting, upward revisions for May and June alleviated fears of a slowdown.

Several economists linked the shortfall to the shutdown of Toys “R” Us, and the loss of 32,000 jobs at sporting goods, book and hobby stores last month.

On Wednesday, the Federal Reserve upgraded its view of the economy’s underlying condition from “solid” to “strong.” The central bank remains on course to raise interest rates twice more this year, in September and December, to avert overheating.

Other indicators suggest the recovery is finally extending its reach. The Labor Department’s broadest measure of unemployment, which includes workers forced to take part-time jobs because full-time positions are unavailable, fell to 7.5 percent in July, the lowest since 2001.

All this has translated into better economic opportunities for workers without a college degree, who account for a majority of the work force. It is a contingent that was championed by Mr. Trump during his presidential campaign, and one that both parties want to appeal to in the midterm elections in November.

The White House was quick to note that the economy is in the midst of the longest monthly streak of job growth in history.

And after 94 consecutive months of job creation, bosses and human resource departments are recalibrating their requirements.

“You definitely get the sense that employers are willing to look at workers they haven’t looked at in the past,” said Martha Gimbel, director of economic research at Indeed.com, the employment website.

Unemployed Americans who might not have put feelers out in the past are also venturing back into the hunt for a job, she said. On Indeed’s search engine, much of the growth in queries lately has been for positions like full-time cashier, mobile home park manager, maintenance person and fulfillment associate.

“This is an indicator that low-skilled workers are seeing opportunities for themselves in the labor market,” Ms. Gimbel said.

Until recently at Steel Ceilings in Johnstown, Ohio, the company’s president, Rick Sandor, insisted on a couple of years’ experience in metal fabrication before considering applicants. But he’s had a harder time lately finding workers for his company, where shifts run from 5 a.m. to 2 p.m. and temporary positions start at $14 per hour.

He now settles for candidates who show mechanical skills, like carpentry or heating and cooling repair. Mr. Sandor is willing to waive the requirement for a high school diploma as well and has even hired applicants with what he terms “minor” prison sentences.

“If a person was truly trying to get their life back together, we thought it would be helpful to offer them a job,” he said.

Unemployment for less-skilled workers has been dropping for several years, with a pickup in hiring in sectors like manufacturing, construction and parts of health care. And to be sure, the month-to-month figures for unemployment among high school dropouts are volatile.

But the long-term trend is clear, as is hiring among the sectors responsible for it. Last month, the leisure and hospitality field recorded a 40,000 gain in positions, with half of that coming from restaurants.

For example, Buffalo Wings & Rings, a restaurant chain with 60 locations in 13 states, has been stepping up hiring and opening new restaurants.

Many outlets have seen double-digit sales growth over the past year, and some are up as much as 40 percent, said Nader Masadeh, the company’s chief executive. The tax cuts that took effect in January are playing a role, Mr. Masadeh said — most families may have gotten a relatively small tax cut, but it is enough to fuel a few more nights out.

“People feel good. They’re going out and spending more money,” he said. “In our segment, $50 feeds you and your family.”

Still, the hot economy brings challenges of its own. At an annual gathering of the company’s franchisees in June, Mr. Masadeh said, he was bombarded with questions about how to retain talent when workers can readily walk out the door and find another job. And costs are rising throughout his business.

“Right now the economy is great, but we’re also seeing higher construction costs, higher commodity items, shortages of labor, so there’s always something that counterbalances something else,” he said.

That pressure, however, has not resulted in much fatter paychecks for most workers. The Labor Department said average hourly earnings ticked modestly higher in July, putting the annual rise at 2.7 percent. That’s below the pace of inflation in recent months.

One reason for the lack of big raises is that a substantial number of workers remain on the sidelines, including the less-skilled ones who are now gradually coming back, said Simona Mocuta, senior economist with State Street Global Advisors.

“We are bringing unemployment way below 4.5 percent, which the Fed considers full employment,” Ms. Mocuta said. “But we are getting very modest wage inflation. This is an issue not just for the U.S., but in every other developed market.”

“Because the labor market is tight, less-educated workers have more of a chance of getting hired,” she added. “For people with the highest level of education, it’s easier to find jobs even when the economy isn’t doing well.”

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Robust Recovery Lifting Laborers Hit the Hardest
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