Participation boost: Americans are still rushing back into the job market

Paul Davidson | USA TODAY

Show Caption Hide Caption Here's why 'low wage' jobs could soon outpace other jobs New data from CareerBuilder.com suggests low-wage jobs will grow faster than 'middle-wage' and 'high-wage' jobs over the next five years.

Edwina Barnard, 42, hadn’t looked for a job since 2009, when a health issue forced her to leave her position as a human resources professional for a nonprofit.

But her doctor recently declared her healthy enough to work again and so she sent out about 30 applications over the past month. She already drew some interest from one employer, but didn’t get the position.

“It’s a good job market,” says the Hampton, Ga., resident, noting that helped encourage her to revive her career. “I love being employed. I didn’t get my masters (in human resources) to sit around the house.”

A vibrant labor market in which employers are struggling to find workers continues to draw hundreds of thousands of Americans back into the labor force, which includes people working and looking for jobs. The shift is especially lifting less-educated workers in their prime working years -- many of whom had grown discouraged and stopped job-hunting -- teens, older workers and the disabled, Labor Department and UBS figures show.

Jobs numbers beat expectations U.S. employers added 209,000 jobs in July, a second straight month of robust gains that underscore the economy's vitality as it enters a ninth year of expansion. (Aug. 4)

Many economists expected the labor force participation rate -- the share of Americans in the labor force -- to resume its long-term decline after recording a sharp run up, from 62.4% to 63%, in late 2015 and early 2016. The belief was that most Americans on the sidelines already had been enticed back into the favorable job market and any others straggling back in would be overwhelmed by the retirement of an average 10,000 Baby Boomers a day.

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But the participation rate has held steady since then as the return of idled workers has offset the Boomer retirements. The labor force swelled by about 700,000 in June and July, pushing the participation rate to 62.9% from 62.7%.

“The strong economy and labor market are bringing more people back to the labor force,” says UBS economist Robert Sockin.

The trend could have significant implications for wage growth and interest rates. The workers returning from the sidelines are keeping the low 4.3% unemployment rate from falling even more rapidly and supplying employers a shadow labor force that may be preventing average pay increases from accelerating more sharply. That’s helping temper inflation, which could prompt the Federal Reserve to put off an anticipated third interest rate hike in 2017.

Perhaps most encouraging is that participation for Americans age 25-54 in their prime working years has climbed to 81.8% from 81.3% over the past 12 months. While the rate for prime-age men has been stable during that period after falling for several years, the rate for prime-age women has jumped nearly a percentage point to 75.3%. Driving the rise is increased participation by women with less than a college degree, according to UBS and the Federal Reserve Bank of Atlanta.

That’s consistent with recent gains in jobs and pay by low-wage, less educated workers. Employers have been more willing to consider low-skilled job applicants because of the shrinking pool of available workers, Sockin says.

And, he says, women may be returning to the workforce in greater numbers than men because of strong employment growth in health care, a female-dominated sector, particularly in fast-growing occupations such as home health aides. Women are also taking advantage of employers’ increasing willingness to provide flexible work schedules, in part, so women can juggle work with childcare, Sockin says. And three states -- California, New Jersey and Rhode Island -- require employers to provide workers paid family leave.

Denesha Newman, 36, a medical assistant in Bellows Falls, Vt., took a 16-year hiatus from work to raise five children and recover from a heart ailment. But with her 16-year-old boy soon to enter college, she wanted to boost her family’s income.

“I’m looking for a better way to take care of my children,” she says, adding that she was cleared for work by her doctor.

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So she and her family moved from Staten Island, N.Y., so she could take an 11-week refresher course at the Dartmouth-Hitchcock health system. She began working as a medical assistant again at a local hospital in May, taking patients’ vital signs, among other tasks. While she was initially a bit rusty, she says her coworkers got her up to speed. “It didn’t feel like I wasn’t working for that long,” she says.

Idled workers are also drawn to less stringent hiring criteria and more hospitable work environments. Some employers are forgoing drug screening tests and bringing on workers who may have had a criminal conviction, says Amy Glaser, senior vice president of staffing firm Adecco.

“It’s very much a candidate-driven market,” she says.

Radial, which operates warehouses and call centers to fulfill orders for retailers, has been offering workers more flexible schedules and waiving a requirement that job applicants have prior experience. Instead, the company, which currently has 780 full-time openings, is willing to train new hires.

“We have to get creative in our solutions to be able to attract people,” says Andrea Crawford, an HR manager at Radial.