The unemployment rate is one way to determine whether job growth is occurring in a state, but its usefulness is often limited. Though the national unemployment rate currently stands at 6.3 percent, this only takes into account individuals who are out of work and actively looking for a job. If so-called "discouraged workers"—those who are out of work and not looking for a job—were also counted, the official unemployment rate would be much higher.
But there are other ways to see whether job growth is moving in a positive direction, such as examining payroll data and watching salary trends. That's because when it is easier for people to find work, they have more leverage when it comes to salary negotiation. Firms find themselves competing with each other to hire qualified workers, and thus must pay more.
Consider the current situation in Texas. With an official unemployment rate of 5.1 percent, the state is clearly experiencing a stronger economy than most parts of the country. In addition, according to a report by the Dallas News, the state's positive rate of job growth is likely to spur wage increase.
"Contacts have told us they're having troubling [sic] finding workers, and typically when you see that, you see higher wages so companies can attract more workers," Dallas Fed senior economist Keith Phillips told the news source. "In the short run, it creates some profit squeeze for employers unless they can get more productivity from workers, but companies have seen increased productivity in the last few years. Employees have had little negotiating power on wages for a long time."
Manufacturing is one area where market conditions are leading to higher wages. While this is good for current workers, it is up to policymakers to make investments that will keep the labor pipeline moving. This means supporting training efforts that will provide skilled workers for CNC machining companies and other aspects of the manufacturing sector.