You may have noticed an increase in the number of hiring signs showing up around Tyler. It’s not a trick of the eyes: the local labor market is on fire.
In April, the unemployment rate in the Tyler metropolitan area, which represents Smith County, was just 3.4 percent. That’s the lowest it’s ever been since the Bureau of Labor Statistics started tracking local unemployment in 1990.
Compared to other cities, Tyler’s unemployment rate puts it in the middle of the pack. There are 388 metropolitan areas across the U.S. and, in May, Tyler’s unemployment rate was tied for 179th lowest among them. Among the 25 metro areas across Texas, we had the 13th lowest rate.
Economists agree that when unemployment goes down, wages should go up. It’s simple supply and demand: when less people are out there looking for work, employers have to work harder to attract new hires—and to keep workers they already have. Unfortunately, we can’t look at how wages are changing in Tyler right now, because it’ll be months before local wage data is published for the second quarter of 2018. But across the country, average American wages didn’t grow at all between June 2017 and June 2018, according to the Bureau of Labor Statistics.
Perplexed economists have come up with a variety of hypotheses to explain why wage growth is not picking up in what appears to be a tight labor market. The New York Times rounded up some popular theories, including declining union membership, low productivity, and the fact that the unemployment rate you read about in stories like this one doesn’t really reflect the total number of Americans who are out of work. (For instance, it leaves out people who aren’t actively looking for a job because they’ve simply given up, due to lack of skills, discrimination, or other problems.)
Another school of thought suggests that wage growth would be significantly higher were it not for a huge wave of retiring high-income Baby Boomers. That is to say, a whole lot of highly paid people at the end of their careers are leaving the workforce in droves right now, and they’re being replaced by younger people who are coming in at much lower salaries, driving down the average amount of money people are earning across the board.
Local employers may find that the falling unemployment rate means they have a harder time finding help. For businesses in Tyler that already have trouble hiring and retaining qualified staff—such as restaurants—the record-breaking trend is likely to make things even tougher. This can be good for workers who traditionally face greater obstacles to getting hired, such as the formerly incarcerated, pregnant women, or those who want to work unconventional hours. However, unless Tyler surprises us by bucking the trend, folks who simply want to make more money in the jobs they already have are likely to be in for disappointment.
Want to learn more about the economics of unemployment and wage growth? We recommend this recent episode from NPR’s economics podcast The Indicator: Jobs: 10 Questions in 10 Minutes.
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