The U.S. economy has become a seemingly perpetual job-generating machine, having steadily added workers for nearly eight years. Even with the unemployment rate now at 3.7 percent — its lowest point since 1969 — hiring hasn't stalled. So far this year, job growth has averaged a robust 208,000 a month, up from a pace of 182,000 for all of 2017.
The trend has defied the predictions of most economists. Many have long warned that as hiring surged and unemployment fell, the pool of potential hires would shrink and trigger a bidding war that would ignite wage gains.
It hasn't happened. Many people are still being hired each month. And pay raises, though rising, remain modest
"Every single time that we predict job growth is going to start slowing and wage growth is going to start picking up in recent years, we haven't gotten that right," said Martha Gimbel, research director for the jobs listing site Indeed.
To try to explain why employers are still managing to hire skilled workers at a steady pace, Gimbel paraphrased a line from the 1971 movie "Willy Wonka & the Chocolate Factory":
"There's no knowing where we're going, but it shows no sign of slowing."
In July, America's employers posted a record 6.9 million job openings, which actually exceeded the number of unemployed people. The abundance of openings suggests that companies expect to keep hiring.
Even the Trump administration, for all its brash public confidence, acknowledges uncertainty about how much further unemployment can fall.
"It's a tricky question, because I don't think we know," Larry Kudlow, the president's top economic adviser, told reporters Friday.
At some point, many employers will likely feel they're running out of skilled workers to hire. Just not yet. Here will be five signals that a labor shortage may finally be at hand:
Pay Raises Spike
Average hourly wages have risen 2.8 percent in the past 12 months. That's basically keeping pace with the inflation rate for consumer prices. But the theory is that as economy keeps expanding and employers find they need to pay more to attract employees, pay could jump, especially in some sectors of the economy that require heavily skilled workers.
Some companies are already taking action. Consider Amazon's just-announced boost in its minimum hourly wage to $15 starting in November. Amazon's rival retailers and warehouse operators, in particular, may feel pressure to raise pay, too.
For now, many employers appear to be raising pay only modestly while in some cases also offering short-term bonuses not included in the government's gauge of hourly earnings.
American Textile, a 93-year-old manufacturer of pillows, sheets and comforters based in Pittsburgh, has found it a challenge in recent months to add and keep workers for its 800-person staff. It's been raising pay by 3 percent to 4 percent annually for years. But it's now introducing the perk of paying bonuses as soon as three months after a worker joins the company.
"Just show up — you'll get something extra," said Pete Marsalis, the company's director of human resources.
More People Seeking Work
One of the best measures of available workers is what's called the participation rate. That's the proportion of working-age adults who either have a job or are actively looking for one.
The participation rate for people defined as prime age — 25 to 54 years old — was 81.8 percent in September. That is below the peak of 84.6 percent in January 1999.
The rate increased in 2016 and 2017, but it's fluctuated this year. Because the rate remains below its peak, it suggests that a pool of people exists who could potentially start looking for work or return to school to obtain specialized skills or training for a job.
To return to the peak participation rate would require roughly an additional 4 million people to start looking for a job and potentially find one.
Sharper Mismatch Between Openings & Skill Sets
If there already were a severe shortage of skilled workers, a broad mismatch would likely exist between the types of jobs available and the types of jobs people are seeking. But research published last month by the job listing site Indeed suggests that the degree of the mismatch has actually narrowed since 2014.
In examining resumes posted to Indeed, the researchers found that roughly one-third don't match the available jobs. Though that's a relatively high proportion, it's less than in 2014, when the proportion was closer to 40 percent.
A shortage of skilled workers, like nurses, might now exist in certain sectors of the economy, Gimbel said. But a shortage doesn't necessarily exist across the entire economy. If it did, the pressures to raise wages would be stronger.
Job Growth Slowdown
When Joe Brusuelas scanned the September jobs report, he saw signs that a shortage of skilled workers could emerge in the near future. He's the chief economist for RSM, a consulting firm that specializes in mid-size businesses.
"Over the past 12 months, we should start to see the pace of hiring grind down," he said.
Brusuelas sees fewer people entering the labor force, a consequence of lower birth rates and other demographic changes as the vast baby boom generation retires. In June, the growth of the labor force was 1.2 percent compared with a year earlier. By September, the 12-month growth in the labor force had more than halved to 0.52 percent.
Fewer people entering the job market could cause employers to slow their pace of hiring because they couldn't find enough skilled workers.
Undesirable Groups Being Hired
The Trump administration's drive to limit immigration could worsen any shortage of qualified workers.
Brusuelas suggested that employers who foresee a lack of qualified workers might broaden their searches to groups they wouldn't have previously considered for hires. He estimated, for example, that 8 million to 10 million people with felony records can't fully participate in the job market now. Bringing these people into the job market is among the priorities of President Donald Trump's daughter Ivanka.
On the White House lawn Friday, Kudlow, the director of the White House National Economic Council, also endorsed the initiative.
"I'm all for it," he said.