WASHINGTON — With the U.S. unemployment rate near a five-decade low, companies are looking harder for employees, and in some cases finding them right at their own workplaces.
Businesses are adding more hours for part-timers and converting contractors to full-time workers. Americans with fewer skills are also benefiting from hiring managers' desperation: The unemployment rate for those without a high-school degree fell to a record low in July.
Employers added 157,000 jobs last month, a modest gain, the Labor Department said Friday. That's below the 215,000 average for the first seven months this year, but economists said the slip will likely prove temporary.
The unemployment rate ticked down to 3.9 percent from 4 percent. That's just two-tenths of a percentage point from the lowest in 50 years.
Consumers are spending freely and businesses are stepping up their investment in buildings and equipment, accelerating economic growth. That's raising demand for workers in industries ranging from manufacturing to construction to health care. The economy expanded at a 4.1 percent annual rate in the April-June quarter, the strongest showing in nearly four years.
This year's pickup comes after a steady economic recovery that has entered its tenth year and is now the second-longest on record. That means the benefits of the recovery are starting to reach lower-skilled, lower-income workers.
The smaller job gain likely reflected some one-time factors, analysts said. Local governments cut 20,000 jobs, the most in more than two years. Most were in education, suggesting some of the decline reflects the start of summer school holidays.
And sporting goods, hobby and toy stores shed 32,000 jobs, by far the most on records dating back to 1990. That is the result of the Toys R Us bankruptcy, economists said.
"This job growth is nothing to be disappointed about, particularly at this stage of the recovery," said Martha Gimbel, director of economic research at job search website Indeed.
Other data in the report pointed to broader-based improvements in the job market.
After remaining elevated for years after the Great Recession, the number of part-time workers who would prefer full-time work has fallen nearly 13 percent in the past year and now stands at 4.6 million. That is the fewest in 11 years and means part-time workers are getting more hours.
Short workweeks have been a source of frustration for many lower-income workers in service industries such as retail, fast food restaurants, and hotels. More hours has helped lift average weekly earnings for retail workers in the past year more quickly than for workers overall.
And the underemployment rate — which includes discouraged workers no longer searching for work, as well as involuntary part-time workers — dropped to 7.5 percent, the lowest in 17 years, from 7.8 percent.
Despite the attention given to the "retail apocalypse," retailers have actually added 96,000 jobs in the past 12 months. A year ago retail employment was falling.
Businesses are also getting less picky in their hiring. Some are relaxing their requirements for college degrees or extensive experience.
"It is increasingly apparent that all that hand-wringing about 'qualified candidates' is code for 'wish list candidates,'" said Josh Wright, chief economist at recruiting software company iCims. "We are only now discovering what employers truly consider to be employable candidates."
Hary Bottka, senior vice president at Randstad Sourceright, which manages hiring for clients in the manufacturing, financial services and health care industries, says companies are increasingly thinking about converting contract workers, over time, to permanent employees.
Many of his client firms are realizing that there is "excellent talent" among contractors, he said.
Average hourly pay gains remained modest in July, increasing 2.7 percent from a year earlier, the same as the previous two months. That has puzzled Federal Reserve chairman Jerome Powell and many economists. Typically, when unemployment has fallen below 4 percent in the past, wages have increased at a faster pace.
With rising gas prices pushing up inflation, Americans actually saw their inflation-adjusted pay decrease in the past year. Consumer prices rose 2.9 percent in June from a year earlier, more than the average wage gain.
One cloud on the horizon has been the Trump administration's trade fights with China, the European Union, Canada and Mexico. The White House has slapped tariffs on steel and aluminum and on $34 billion of imports from China, and several companies have hit U.S. imports with retaliatory duties.
Yet the trade fights didn't appear to impact hiring last month. Manufacturers, among the most directly affected by the import taxes, added 37,000 jobs, the most in seven months.
Some companies are offering higher pay to find and keep workers, particularly for specific skills.
Brian England, the owner of BA Auto, a car repair shop in Columbia, Md., would like to add another technician and an apprentice to his 18-member staff. Yet auto repair work requires more technical skills than the past because of the increasing concentration of computers and electronics in newer cars.
He has raised starting pay roughly 10 percent in the past two years, from $60,000 to between $65,000 and $70,000.
"The more you make an employee healthy and happy, the more that they're going to stay with you," England said.