The April jobs report in the US wasn't great as there were misses across the board. The total jobs created was 164,000 which missed estimates of 191,000. The participation rate missed estimates for 62.9%, coming in at 62.8%. Furthermore, the year over year hourly earnings growth was 2.6% which missed estimates for 2.7% growth. Because the work week was flat at 34.5 hours, this means the weekly earnings growth decelerated from 3.2% in March to 2.9%. These stats aren't consistent with a tightening labor market. The wage growth is supposed to increase at the end of the labor market cycle as the demand for labor exceeds supply.
The unemployment rate fell from 4.1% to 3.9%. Usually, this means wage growth, Fed rate hikes, and the end of the business cycle. This explains why stocks usually don't perform well when the unemployment rate is low, especially when it is increasing. We'll review a potential explanation for the lack of wage growth later in this article.
Education & Age Group Unemployment Rates
First let's look at the tables below which show a few cross sections for the labor market, explaining how tight the labor market is.
Source: tables below
As you can see in the first table, the percentile is actually lower for the poorly educated compared to the highly educated for those ages 35-54. That's not surprising because there has been an influx of graduates which makes it difficult for some to get a job. Plus, the manufacturing sector has recently shown strength. The best categories are actually “Less than high school” ages 16-19, 20-24 and 35-54, suggestive that illustrative to the past, unemployment is near historic lows. Most segments, even bachelors or higher have a tight labor market.
The second table clarifies the percentiles seen in the first one. Even though the percentiles are higher for some age groups who are highly educated, the unemployment rates are lower for graduates. The point here is to show that relatively, the poorly educated are doing well. However, it still makes sense to get an education if you want a lower chance of being unemployed.
