The jobs report is definitive proof that America is running out of people to hire
The headline numbers for July were great.
The US economy added 255,000 jobs in July, well over the 180,000 expected by economists. Additionally, the unemployment rate held at 4.9% as the labor force participation rate ticked up to 64.8%.
But an under-the-hood number that caught our eye, which comes to us from Conor Sen at New River Investments, is the unemployment rate for people without a high school degree.
For that group, the unemployment rate in July dropped to 6.3%, a massive 1.2% plunge from the month before. Now, there is probably some month-to-month volatility here, but this still marks lowest reading since October 2006 and indicates that businesses are moving well down the skill scale to find employees.
Equally as encouraging, the drop in unemployment for people without a high school degree came even as the number of people in this category came into the workforce, meaning it wasn't just a decline in their participation rate causing the change.
Additionally, the unemployment rate for teenagers fell 0.4% to 15.6%. The number may have been impacted by students finding summer employment, but it also shows that businesses are willing to hire less-skilled workers to fill roles.
Both of these are significant because these groups are typically what you would think of as the hiring of last resort.
Coming out of a recession, businesses are most likely to hire highly-skilled and educated workers first. Then as the cycle goes on and those high-skilled workers get snapped up, businesses move down the scale to lower-skilled and less educated workers.
As Business Insider's Akin Oyedele noted, the stretch to find any worker to hire will drive up wages as businesses try and attract talent.
This could put some pressure on small businesses to compete with larger firms' wage offerings, but is certainly good news for workers looking for a raise. Of note: wages in July came in at their highest since the Great Recession.
And with job openings near an all-time high and businesses taking a record amount of time to fill a job, the falling unemployment rate for younger and less educated workers proves there is little slack left in the US labor market.