It is easy to reject a job candidate without a work history. There is a lot about working that can’t be learned in school or job training programs: Simply keeping a job shows that an employer found that a candidate’s work was worth the wage paid.
The “no work history” trap is hard to escape. Many eventually stop trying—they settle into a pattern of relying on family members or odd jobs in the cash sector.
This hot economy may give them a chance to join the mainstream. The U.S. job market is now offering a lifeline to those people who’ve had a hard time getting their careers started. The 2019 average unemployment rate of 3.7 percent is the lowest in 50 years and lower than all but three years going back to 1948—it was 3 percent in 1952, 2.9 percent in 1953 and 3.5 percent in 1969. The accompanying chart shows record or near-record lows also apply to New York and the Rochester metropolitan area (as far back as we have comparable data).
Historically, a strong economy with falling unemployment triggers inflation. The Federal Reserve responds by pushing interest rates up to cool off the economy before prices begin to spiral. Experience tells us that inflation is a nasty beast—once released, it is hard to put it back in its cage.
Yet the inflation rate, too, is in uncharted territory, rising less than 2 percent in 2019 versus the same period in 2018.
It is low for many reasons: technology has driven down the cost of manufacturing; power has shifted to owners of capital (corporations) and away from workers, holding wages down; the “gig economy” has made labor markets more competitive; and falling energy prices have reduced the cost of energy-intensive products and services. For these and other reasons, the Federal Reserve concluded that inflation was still under control and lowered interest rates a quarter-point, giving the economy yet another boost.
Although inflation hawks are wringing their hands (and two members of the Federal Open Market Committee that makes the interest rate decision voted against the majority), a hot labor market may open the door for marginalized workers to get back into the game. Anecdotally, employers have been more open to workers without much of a job history, workers with a criminal record and people whose credentials aren’t quite up to snuff.
This could be good for Rochester, too. Although the unemployment rate has been falling with that of the nation, the labor force has been shrinking at a faster rate, dropping nearly 19,000 from 2011-13 to 2017-19. How come? The population seems to have fallen slightly over the period, but not enough to explain the labor force drop. Retirements could account for a portion.
Many have simply quit looking for work. Discouraged workers, people working part time who would rather be working full time and others with only a marginal connection to the labor market are reported at the national level as the U6 unemployment rate. In 2019, the U6 rate had fallen to 7.3 percent from a high near 17 percent in 2010.
The Department of Labor doesn’t have enough information to calculate this figure at the metro level, but perhaps we can use the national figure to hazard a guess. As the national U6 rate is twice the traditional unemployment rate, we might expect that the same proportion applies in Rochester. As 19,000 here are reported as unemployed, that means that about the same number are likely in this U6 group locally. That this figure is equal to the recent decline in the metro labor force is largely a coincidence (they aren’t the same thing). It does give us an idea of what’s possible in a strong labor market.
As the demand for workers increases, we can expect that individuals who might have been passed over a decade ago will get a second look. If discouraged and marginalized workers can get access to the mainstream labor market, we will all benefit.