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Unemployment drops to 3.9%, lowest in 17 years

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The unemployment rate hit 3.9 percent in April, breaking below 4 percent for the first time since December 2000. Here's what you need to know.

Businesses added 164,000 jobs. This reflects moderate, but not blowout, growth. Economists were expecting 190,000. Job growth in March was also disappointing. (When the figures for March were initially released, they showed a disappointing 103,000 additions; they were since revised to a better-but-not-great 135,000.)  

Wages grew 2.6 percent year-over-year. Sluggish wage growth has been a persistent feature of the current recovery, with growth unable to break the 3 percent barrier. Some economists say that's because businesses are choosing to hire less educated or otherwise less "desirable" workers rather than offer more pay. (Some, for instance, are dropping drug-testing requirements.)

"There's what appears to be hesitancy on the part of employers to raise wages," Cathy Barrera, chief economist for ZipRecruiter, told MoneyWatch Thursday. "Instead of bidding up the wages for those people who are classically 'good' candidates, employers are looking at other types of candidates, who may not have gotten a lot of consideration at other times, knowing they won't have to make the same wage offer."

2.7 million jobs have been added since President Donald Trump took office.

The 4 percent mark is psychologically important. Many economists consider a sub-4 percent unemployment rate unsustainable over the long term. Historically, employment has dropped below 4 percent just before a slowdown or crash, as the Washington Post reported

The African-American unemployment rate dropped to 6.6 percent. That's the lowest rate on record, and significant because black workers' unemployment is typically double that of whites. The unemployment rate for high-school dropouts rose slightly, to 5.8 percent. The rate dropped for high school graduates, college graduates and people with some college. 

Critics say it's "the wrong way to get to 3.9 percent." The unemployment rate only counts people as unemployed if they've actively looked for work recently, and so it can drop for several reasons. It can drop if more people get jobs; it can also drop because fewer people are looking for work. Nearly 400,000 people have left the labor force in the last two months, helping drive down the unemployment rate.

"Under-employment" stands at 7.8 percent. To more fully gauge the health of the job market, economists look at a broader measure of employment that looks at: The unemployed; people who want to work but have given up searching; and people working part-time who can't find full-time work. That measure stood at 7.8 percent in April.

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