There’s growing optimism that the country can avoid a downturn. One key reason this is possible is the surge of new workers. Nearly 4 million more people are employed now than just before the pandemic hit. That’s more families with steady incomes to spend, which helps explain the vigorous sales of everything from cars to gardening supplies. There has also been a big upshift in the labor force since the pandemic: Low-paying hospitality employment still hasn’t recovered, as workers have traded up to higher-paying business, health-care and warehouse work. This has brought another boost to incomes and an important mental shift as more workers who used to hop from job to job now see themselves on a steady career path.
The mistaken notion that Americans don’t want to work can now be put to rest. Nearly 81 percent of Americans ages 25 to 54 are working, the highest share since 2001. What has been particularly jaw-dropping is how resilient job gains have been since March 2022, when the Federal Reserve started aggressively hiking interest rates. Back then, Fed Chair Jerome H. Powell argued the labor market was “unhealthy.” There was a misguided belief that it would take a recession to get supply and demand for goods — and workers — back to more normal levels. But what many experts missed was how many workers of color and immigrants wanted to work and were still looking for opportunities.
Fewer White people are employed now than pre-pandemic. In contrast, over 2 million more Hispanics are employed now, over 800,000 more Asian Americans and over 750,000 more African Americans. This same trend played out just before the pandemic. Companies were also complaining then that they could not find workers, and experts were saying the nation was at “full employment.” Yet month after month, Black and Hispanic people (largely women) kept entering the labor force and getting jobs. It’s also notable that over 2 million more foreign-born people are employed now than before the pandemic. This means that more than half of the new workers have been immigrants.
If the U.S. economy ends up having a soft landing, it will largely be because immigrants and people of color have kept entering the labor force — helping to keep production going, consumption solid and wage growth (and inflation) cooling to a more sustainable level.
What’s going on is partly a result of low unemployment, what economists often dub a “tight” labor market. Black and Hispanic people often do not get hired until late in a recovery. In the past year, there has also been a strong uptick in jobs in government and health care, sectors in which women of color have historically found employment opportunities. Employers have also expanded their hiring searches, improved pay and benefits, and removed requirements for college degrees for many positions. All of this has helped expand opportunities. This past spring, for the first time, Black Americans were as likely to be employed as White Americans.
“There is sufficient demand that employers aren’t discriminating. They need workers,” economist William Spriggs told me in a conversation shortly before his death last month.
Spriggs spent years pointing out that too many experts were overlooking how many more people of color were ready to work if employers gave them a chance and if the jobs weren’t dead-end ones. As other economists were stunned by the labor market in recent months, especially the gains for Black people, Spriggs had a different take. “It’s not that the labor market is ‘overheated’; it’s that the labor market is getting closer to how it’s supposed to work in a textbook,” he said.
All of this suggests experts still don’t fully understand what “full employment” is or how much more labor supply is out there. Policymakers have spent significant time trying to understand why so many White men no longer work. Their labor force participation has been declining for 70 years. It’s still important to look for ways to stop that, but policymakers also need to look at how to get more women, especially women of color, working. They are already demonstrating — time and again — that they want to work more.
The U.S. labor force is more diverse today than ever. As baby boomers retire, they are being replaced by younger workers, especially workers of color. Non-White people now make up more than 40 percent of the labor force. That’s almost double the 1990 level. There has been a steady rise in workers of color as the American population has diversified, but the workforce trend accelerated somewhat during the pandemic.
No one wants to see the gains for Black and Hispanic workers backtrack. But it’s equally important to ask: How many more people could find jobs? And why aren’t policymakers trying to find out?