Job market improving: Workers come off the sidelines

WASHINGTON -- A surprisingly strong burst of job growth over the past year has led many economists to wonder: Where are all the workers coming from?

As recently as last spring, analysts had worried hiring would slow as the pool of unemployed shrank. Many employers have complained for years they could no longer find enough people to fill their open jobs.

Turns out they were both wrong.

The pace of hiring in 2018 was the most robust in three years, and for a surprising reason: Many more people have decided to look for work than experts had expected. The influx of those job seekers, if sustained, could help extend an economic expansion already the second-longest on record.

The growth in America's workforce -- made up of people either working or looking for work -- has helped reverse an alarming consequence of the recession: The exit of millions of Americans from the job market.

For five years after the Great Recession ended in 2009, many Americans gave up on their job hunts. Some suffered from disabilities. Others enrolled in school or stayed home to raise children. Still others were stymied by criminal pasts or failed drug tests. Some just felt discouraged by their job prospects. Because they weren't actively seeking work, they weren't even counted as unemployed.

Economists had speculated millions of these people lacked necessary qualifications or were otherwise deemed undesirable by employers and might not work again. That meant stronger hiring wouldn't necessarily help them.

Yet for the past few years it has. The proportion of Americans ages 25 to 54 who have a job has reached nearly 80 percent -- the same as before the recession. Economists refer to this age group as "prime-age" workers. It excludes older Americans who have retired and younger workers who may be in school.

"The U.S. is a very diverse and dynamic economy and can often surprise us," said Julia Coronado, chief economist at MacroPolicy Perspectives. "This is a positive surprise. We're due for one."

Other factors holding some people back from seeking work have included the high cost of child care and a lack of paid leave. Research suggests such costs have held back the workforce participation rate of prime-age U.S. women, a rate trailing those in most other industrialized countries.

Child care costs delayed the return of Valarie Regas of Atlanta to the job market after she gave birth to her second child in 2012. Regas wanted to go back, but most of the jobs she found didn't pay enough to cover child care. So she remained mostly out of the job market for five more years.

After completing a coding boot camp at Georgia Tech, Regas was hired last year by a division of the European aerospace giant Airbus. The company initially wanted someone with more experience, she said. But after she pitched them on her enthusiasm and willingness to learn, she was hired as a software programmer.

"Even with the exorbitant cost of child care, I am now bringing home real money," said Regas, 36.

Many companies are relaxing their education or experience requirements, according to economists and staffing agencies. They are considering more applicants with disabilities. Businesses are expanding their training programs. Some, analysts say, are also looking with a more open mind at people with criminal backgrounds.

The rebound has confounded many experts' projections. In 2014, the Congressional Budget Office forecast the proportion of people ages 16 and up either working or looking for work -- often called the participation rate -- would be just 62.5 percent by the end of 2017 and would decline thereafter. Instead, the figure reached 63.2 percent in January, a five-year high.

"We have learned this year that there's more slack in the labor market because people are coming back in," Fed Chairman Jerome Powell told Congress last week.

The influx of people, Powell acknowledged last year, had come as a "surprise."

Women, it turns out, have returned to the workforce in greater numbers than men. The proportion of prime-age women in the labor force is now higher than before the recession. And for women ages 25 through 34, participation is at an 18-year peak. The participation rate for prime-age African-American women also exceeds its pre-recession level.

As they assess a broader pool of job applicants, some companies are doing more to develop skills. A survey by Manpower found 54 percent of employers invested in training programs in 2018, up from just 20 percent four years earlier. One-third said they're adjusting their education and experience requirements, with some no longer requiring a college degree.

Ricardo Madan of TEKsystems, a tech services and staffing firm, said his company is willing to train more of its new hires, rather than just finding already-qualified workers. Last year, the Charlotte-based company paid for a three-month boot camp for 25 potential employees run by Trilogy Education, a training company, and Southern Methodist University in Dallas.

It ended up hiring 19 of them.

"We weren't thinking this way five years ago," he said. "It's never been this hard to find people."