Employers’ Hiring Push Brings Workers Off the Bench

Crews working on a tunnel project in Roanoke County, Va. The demand for workers has brought some Americans back into the labor force and encouraged an increasing number of others to switch jobs.

Despite sharpening trade tensions, a hefty rise in payrolls has provided the latest evidence that the American economy is strong enough to keep pulling benched workers back into action.

Six hundred thousand people joined the work force in June and started actively hunting for a job, the Labor Department said Friday in its monthly report. Of those who found one, three-quarters had been outside the pool of those officially ranked as unemployed.

The number of Americans working part time because of their inability to find a full-time position fell — as did the number of those too discouraged to bother searching.

“I’m really excited to see that the labor force is growing,” said Catherine Barrera, chief economist of the online job site ZipRecruiter.

Over all, the economy added 213,000 jobs. The unemployment rate ticked up to 4 percent, but Ms. Barrera was unruffled, saying, “There were some people who weren’t participating in the labor force who are now being encouraged to return.”

For workers, the modest 2.7 percent increase in the average hourly wage over the past year was disappointing; pay raises are a nose behind some measures of inflation. But the slow pace does undercut arguments that the economy is in danger of revving too fast.

“This should take a little bit of pressure off the Federal Reserve to step up the pace of tightening,” said Jim O’Sullivan, chief economist of High Frequency Economics, referring to the debate over how quickly to raise benchmark interest rates.

The jobs report caps a string of encouraging economic readings. Some estimates for growth in the second quarter are bouncing above 4 percent. The manufacturing sector buzzed with activity last month, and spending on construction rose. New jobless claims are at historically low levels. And many consumers displayed their confidence in the economy by kicking off the summer with a new car purchase.

“JOBS, JOBS, JOBS!” President Trump said Friday on Twitter after the Labor Department’s data for June was released.

Anxieties over the fallout from a trade war, however, continue to cast shadows as $34 billion in additional tariffs on China went into effect on Friday, and the Chinese vowed to retaliate. “They’re playing with fire, really,” Mr. O’Sullivan said of the Trump administration’s trade policies, echoing warnings from companies and trade groups about the potential impact on business and jobs.

Credit...Heather Rousseau/The Roanoke Times, via Associated Press

For employers, the more immediate challenge has been finding qualified, reliable workers at the going wage rate. In addition to the growing ranks of new job hunters, the quickening competition is giving more employees the confidence to quit in search of a better deal. But the share of prime-age workers participating in the labor force is below the level that prevailed a decade ago. And the number of job openings is striding ahead of the number of workers ready to fill them.

“There’s more jobs than there are people available for jobs — at every level,” from the factory floor to the executive suite, said Joe Galvin, chief research officer of Vistage, an association of small-business owners and executives.

Employers surveyed by Vistage last month said they were increasing pay, sweetening benefits packages and trying to create an appealing work culture to retain workers as well as attract new ones — including candidates not previously looking.

Still, as this latest jobs report shows, the lengthening list of help-wanted postings has had only a modest effect on hourly earnings. Several employers said their reluctance to raise prices limited the wages they could offer.

Gigi Schweikert, the president and chief operating officer Lightbridge Academy, which operates child care facilities, said the company was moving toward a $15-an-hour minimum over three years, but had to keep its fees affordable.

“We are always looking for job candidates,” she said, acknowledging that her industry is known for high turnover rates, low pay and a predominance of female workers. “We want to be more aggressive, but we can’t price parents out of the market.”

And despite the demand for workers, many of the available jobs, particularly in lower-wage sectors, are short on appeal. Many employers limit hours to avoid paying benefits like health insurance. Work shifts frequently change with little notice, and wage increases are still insufficient to cover living costs. Stability and security are often scarce.

Laid off 11 months ago in Philadelphia, Jim Stallard said he turned down four jobs because “they were all extremely low paid and didn’t have any benefits.” Mr. Stallard, 57, eventually went to work at a large-format printer for $18 an hour — far less than the $30 an hour and ample health and retirement benefits he earned previously managing the print and copy shop at Drexel University.

Better-skilled workers are generally in a stronger bargaining position. DocuSign, an electronic-signature company with more than $500 million in annual revenue, added 100 sales, engineering and technical workers last month and intends to hire another 500 over the next six months, said Joan Burke, the company’s chief people officer.

“You just cannot be in this game without being competitive,” Ms. Burke said of salaries.

The Labor Department’s report provides only a temporary and incomplete snapshot of the economy. Updates to the April and May reports registered an additional 37,000 jobs. June’s estimates will be revised twice. For the moment, though, it showed the manufacturing sector continued its hiring surge, with 36,000 jobs added. Business and professional services as well as health care also had strong showings, while the retail sector slumped, losing 22,000 jobs and erasing nearly all the gains made in May. More job losses, from the demise of Toys “R” Us, could show up in July.

The unemployment rate for blacks also worsened in June from the previous month, rising to 6.5 percent, while the rate among Hispanics improved, falling to 4.6 percent. (Among whites, the jobless rate is 3.5 percent.)

Fears of a trade war are keeping employers on edge. Recent surveys of business owners have reflected dismay with the uncertainty generated by tariffs, whether already imposed or threatened.

As the newly released minutes from the Fed’s meeting last month noted, intensifying anxiety about trade policy could “eventually could have negative effects on business sentiment and investment spending.”

The United States Chamber of Commerce also stepped up its warnings that escalating tariffs could result in “lost sales and ultimately lost jobs here at home,” publishing a state-by-state breakdown of exports and jobs at risk.

Last week, General Motors said that tariffs could lead to “less investment, fewer jobs and lower wages.” The motorcycle manufacturer Harley-Davidson, based in Wisconsin, announced it would shift some production overseas to sidestep retaliatory tariffs imposed by European countries.

Heightening trade tensions are not the only risks over the longer term.

As Oxford Economics, an economic research firm, noted in its newsletter, “While it may feel like a party in the U.S.A., several risks are building,” including growing consumer debt.

Most economists continue to warn that the economic high has been pumped up in part by deep tax cuts financed by ballooning debt.

At the moment, though, “the trends are strong,” Mr. O’Sullivan of High Frequency Economics noted, and “the unemployment rate is going to keep falling.”

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