Furthermore, there has been no surge in homelessness or other indications of acute hardship as some critics of welfare reform had anticipated. As the strong economy has prompted more individuals to enter the labor market, the unemployment rate has fallen dramatically. As Figure 2 shows, unemployment has fallen considerably over the course of the current expansion. Even high school dropouts have seen their unemployment rate fall below 7 percent. In fact, tight labor markets are making it very difficult for some firms to find workers to fill available positions.
Shortages appear to be most severe for firms seeking high-skill workers.
A recent survey of human resource executives found that 54 percent reported a shortage of skilled labor in the industries in which they recruit. Another survey by the Bureau of National Affairs showed that more than half of human resource executives listed recruitment among their departments' top three priorities for 1998. Despite low unemployment and very tight labor market conditions, there is little evidence in the economy of significant inflationary pressure. In early 1998, inflation hit its lowest level in 32 years.