With the unemployment rate falling to 3.9%, causing concern for employers about a labor shortage, companies may increasingly recruit workers who they have historically avoided.
“There’s anecdotal evidence where we see employers who in areas with labor shortages are turning to groups that they wouldn’t usually have turned to,” said Catherine Barrera, chief economist at ZipRecruiter. “That may include those who have spent time in prison, people who have less education or less experience. Some employers are foregoing drug testing because the labor market is so tight.”
This comes as the unemployment figures for April dipped further below what economists dub as full employment—about 5%. The concept suggests that at 5%, everyone in an economy that wants a job, has a job.
The unemployment rate among high school dropouts who are 25-and-over, for instance, was 5.9% in April. And while that was higher than a month earlier, it was below the 6.4% rate a year ago, according to the Bureau of Labor Statistics. Data has also shown that disabled workers are returning to the workforce, according to the New York Times.
The tapping of workers in typically underemployed groups may also help explain why wage growth proved to be slower than expected in April, with the average hourly wages rising just 0.1% during the month.
Though that may soon change as employers seek to keep their workers by giving them higher wages.
“With the unemployment rate at 3.9%, we except wages will gradually reaccelerate over the course of the year,” a team of Morgan Stanley economists led by Ellen Zentner wrote in a Friday note.