This Is What Record-Low Unemployment Looks Like in America

What will happen when the U.S. unemployment rate falls below 4 percent, which is expected to occur by this summer? One way to tell is to look at cities where joblessness is already lower than that. Bloomberg News reporters traveled to Iowa, Georgia, and Maine. What they saw there is encouraging. They discovered that employers have found ways to cope with tight labor markets and still make money. Businesses have pulled in workers from the sidelines—including retirees, immigrants, and the homeless—and retooled processes to use less labor. Some have raised pay considerably for certain jobs, but so far there are no signs of an overall wage explosion. That should embolden those at the Federal Reserve who want to raise interest rates slowly to give growth a chance.

Portland, Maine: Making Do With Fewer Workers

From polished sea-salt caramel balls to truffles packaged with hand-tied bows, the treats on sale at Wilbur’s of Maine Chocolate Confections in Freeport exude artisanal charm. While that’s a source of pride for owner Andrew Wilbur, whose parents started the business, he’s staring down a dilemma. Manufacturing workers are hard to come by in Freeport, which is 15 miles north of Portland and part of its statistical area. At 1.8 percent, the unemployment rate is the third-lowest in the country. “It’s made me think, Do I go to more mechanization?” Wilbur says from inside his production plant, where three employees are making candy in what look like mini cement mixers.

Wilbur has raised wages for his 40 employees by more than 20 percent over the past three years, but he’s passed hardly any of his costs onto consumers. Business at his three brick-and-mortar outlets is already unchanged or down, and he would have lost online and wholesale customers if he’d raised prices substantially, he says.

It takes a full year for these employees to get up to speed and five for them to hit what Wilbur, without a hint of irony, calls “the sweet spot.” With inexperienced workers starting at $12 to $14 an hour, onboarding is becoming a major expense. Lowering his voice a little, Wilbur admits that he’s changed some of his packaging to make it less labor-intensive, including doing away with hand-applied labels.

Shipwreck & Cargo, a souvenir shop in downtown Portland that stocks items such as lobster-printed boxers and Maine blueberry tea, staffed its floor with only two sales assistants during the busy summer season instead of the usual three. The supply of workers has dried up just as the tourism industry is on an upswing, says store manager Jennifer Smith. “You want the right people, standing and smiling in front,” says Smith, who adds that the applicant pool has gotten smaller and less qualified in the five years she’s been running the shop.

Read more at Bloomberg.