The unemployment rate fell to a nearly five-decade low in September, punctuating a remarkable rebound in the 10 years since the collapse of Lehman Brothers set off a global financial crisis.
By almost any measure, the American economy is humming. Gross domestic product is on pace for its best year since the housing bubble of the mid-2000s. Consumers and businesses are the most confident they have been in years, if not decades. Stock market indexes are near record highs.
The latest milestone came in a Friday report from the Labor Department: The unemployment rate fell to 3.7 percent last month, the lowest since December 1969, when hundreds of thousands of working-age Americans were serving in Vietnam.
“I view this as the strongest labor market in a generation,” said Andrew Chamberlain, chief economist at the career site Glassdoor. “These really are the good times.”
The turnaround from a decade ago is hard to overstate. In September 2008, American employers cut 443,000 jobs as the financial system collapsed around them. More than seven million more jobs evaporated in the months that followed. Even when the hemorrhaging stopped, shellshocked executives were slow to bring back laid-off workers, sparking fears of a “jobless recovery.”
But when the hiring engine finally kicked back into gear, it did so in historic fashion. The 134,000 jobs added in September made it the 96th consecutive month of growth — eight full years, double the previous record. Employers have added close to 20 million jobs during that streak. (September’s growth, a modest slowdown from August, would probably have been stronger absent the effects of Hurricane Florence, which struck the Carolinas in the middle of the month.)
Crucially, the recovery is reaching groups that struggled in the early years of the recovery. The unemployment rates for African-Americans and Hispanics are both near all-time lows. Teenagers, less-educated workersand disabled Americans have also made progress in recent months. And anecdotal reports suggest that companies are becoming more willing to hire people with criminal records or to waive drug-testing requirements.
Republicans are hoping the strong economy will help them hold off a potential “blue wave” of Democratic victories in next month’s midterm elections. Friday’s report was one of the last before Election Day, and President Trump wasted no time before cheering the news on Twitter.
Indeed, the decade-long economic rebound from the financial crisis has been impressive more for its durability than for its strength. Millions of Americans remain stuck in part-time or temporary work, and many of the middle-class jobs wiped out by the recession have never returned. As a share of the population, employment remains well below its 2000 peak, a gap only partly explained by the aging population.
Most significant, strong hiring has not yet translated into robust raises for many workers. Average hourly earnings rose 2.8 percent in September from a year earlier, down from 2.9 percent in August and well below the growth that economists would usually expect with the unemployment rate this low.
But there are signs that wage growth could at long last be gaining momentum. Before last month’s hiccup, the pace of growth had been drifting upward. Industries where labor is especially tight, such as construction and technology, are seeing wages rise faster.
Workers at the bottom of the earnings ladder, who were left behind early in the recovery, are now seeing particularly strong growth: Amazon announced this week that it would raise the minimum wage for its employees in the United States to $15 an hour.
Amy Glaser, a senior vice president at the staffing firm Adecco, heard the Amazon news on television while preparing for a meeting with a rival e-commerce firm. Ms. Glaser helps companies hire for the holiday season, a task that Amazon had just made even more difficult for them.
“There was definitely a feeling of concern,” she said. “It puts increased pressure on them in a market where they already knew they were going to have to make significant adjustments on wages.”
Higher pay alone may not be enough. The combination of a tight labor market and rapidly growing online sales has made the competition for warehouse workers particularly fierce this year. Ms. Glaser said companies were hiring earlier, easing job requirements and giving workers more control over their schedules, a big shift in an industry that has traditionally expected workers to show up when and where they are needed.
“The demand for workers is higher than ever, and the supply just isn’t out there right now,” Ms. Glaser said.
Christine Specht is dealing with just that challenge. Ms. Specht runs Cousins Subs, a Wisconsin sandwich chain that is struggling to find workers as it looks to expand into the Chicago area.
Cousins has raised wages in recent years but still pays well under the $15 an hour that Amazon and other big companies are promising. As the operator of a small chain in a competitive industry, Ms. Specht said, she is reluctant to raise prices in order to pay employees more.
“We can’t always run to the menu board every time there’s a cost increase in running our business,” Ms. Specht said. “That’s kind of a last resort.”
Instead, the company is looking for other ways to attract workers. Cousins has ramped up its training program to help workers advance into management, offered referral bonuses to employees who help recruit their friends and staged “hiring blitz days,” when executives set up shop in a restaurant and interview candidates on the spot. More than anything, they are trying to move quickly.
“You can’t sit on applications anymore, because people have options and they will go somewhere else,” Ms. Specht said.
Many companies are outsourcing their human resource functions to temporary staffing agencies.
Often time the resources a solid outside recruiting firm can add to a growing company far outweigh the cost of growing your own internal recruiting division.
Many economists think the shortage of workers will cause job growth to slow in the months ahead. But others argue that there is still room for the labor pool to expand, as employers become willing to consider candidates they would have overlooked earlier and as higher wages attract people who had been choosing not to work.
“You did see something like that in the late ’90s, which is probably the closest analogue,” said Jeremy Schwartz, an economist for Credit Suisse in New York. “In a sufficiently strong labor market, you really were pulling people from the sidelines.”
It is unclear whether that can happen again. In the 1990s, baby boomers were in their prime working years; today, they are retiring at a rate of 10,000 a day. The number of people being hired from outside the labor force is near an all-time high. Yet the participation rate — the share of adults working or actively looking for work — has been essentially flat in recent years.
“You do see prime-working-age individuals coming back into the labor force,” said Michelle Meyer, head of United States economics for Bank of America Merrill Lynch. “But the demographic forces are so fierce that it provides a complete offset.”
Policymakers at the Federal Reserve are watching warily for signs that the shrinking pool of labor is leading the economy to overheat, as competition for workers drives up wages and, ultimately, inflation. That could force the Fed to raise interest rates more quickly than planned, which could cause a recession.
Yields on United States government bonds have risen sharply in recent days, a sign that investors expect inflation — and interest rates — to rise in coming years. Those concerns have also filtered through to the stock market, where major indexes fell again on Friday after dropping on Thursday.
But in a speech in Boston earlier this week, Jerome H. Powell, the Fed chairman, said he didn’t see the tight labor market translating into faster inflation. Friday’s report, which showed the unemployment rate falling without wage growth accelerating, is unlikely to change that view, Ms. Meyer said.
With the economy in such strong shape, attention on Wall Street has turned to what could bring the good times to an end. Fed rate increases are one popular answer. A trade war is another.
Economists and business leaders have warned for months that Mr. Trump’s tariffs could threaten the recovery, particularly in manufacturing. There is little sign of that so far, however. That sector added 18,000 jobs in September, and the revised figures erased what was initially reported as a small decline in August. Other measures of the industrial sector likewise show continued growth.
“We really don’t have any negative impact from the tariffs yet,” said Joseph Brusuelas, chief economist for the consulting firm RSM.