A Number As Important As Dow 10,000
The current business expansion is a remarkable thing to behold. It is the longest in peacetime history, growth and productivity are rising even as the cycle matures, inflation is amazingly absent, and soaring tax revenues are putting the federal budget in the black. But from a long-term societal perspective, nothing compares in significance to the dramatic decline in unemployment, which hit 4.2% in March and may fall to 3.9% by yearend. If this continues well into the next decade, we may finally see the integration of millions of low-skilled, poorly educated people into the workforce. This would be a major milestone for the nation.
The progress to date is impressive. First, a tight job market is easing the way for welfare reform by providing a bounty of entry-level jobs. Second, for the first time since the heyday of heavy industry, people at the bottom part of the workforce are getting a chance to step onto the escalator of upward mobility. Finally, wages are going up at the bottom, thanks in part to very low inflation. Hourly pay of nonsupervisory workers rose 3.6% in March from a year earlier.
Groups with traditional high unemployment rates are making truly astonishing gains. The March unemployment rate for people without a high school diploma fell to 6.1%, a record low. Joblessness among Hispanics dropped to 5.8%, another record low, while the unemployment rate for blacks fell to 8.1%. Single women with families were the largest category of people hired last year. Not long ago, economists would have been glad to settle for an economywide unemployment rate of 6%, fearing that anything lower would cause inflation.
To employees with little experience in the workplace, arriving on time, being courteous, or simply taking orders from a boss may all be new skills. Corporations should expect to invest more in training. Those that do, such as Marriott International Inc. and Sony Corp., find that training pays off.
That is just the first step. Moving from unemployment to employment is a major breakthrough. Learning basic math and communication skills is necessary to move beyond minimum wage pay and begin the journey of upward mobility. Schools that missed their chance with kids the first time around may now get a second with the same students--only this time, they'll be more motivated.
The term "opportunity society" has, by now, become a political cliche. But for millions getting their first toehold in the economy, it is real enough. Policymakers should realize that for them, a small rise in inflation pales in significance before economic growth and jobs. Fast growth and low unemployment are needed for years to come to finish the job of integrating the have-nots in American society. The low unemployment rate in America is an unmitigated good. At 4%, we should cheer it as loudly as the Dow at 10,000.