The economy is adding a lot of jobs, but still needs to add a lot more.
That’s the simple message of the latest jobs report, which was good, but not quite as good as the headline numbers suggest. Now, if you’re a glass-half-full kind of person, you’d point out that the economy added 223,000 jobs in June, for a three-month average of 221,000. That’s pretty healthy, and more than enough to keep bringing the unemployment rate down. But if you’re a glass-half-empty sort, you’d counter that the economy lost 60,000 jobs in revisions to April and May, that the labor force shrank by 432,000 in June, that the share of 25- to 54-year-olds who are actually working hasn’t increased at all since the start of the year, and that workers didn’t get a raise last month. In the past year, average hourly earnings are up only 2 percent; in a normal economy it would be something like 3.5 percent.
This shouldn’t be that much of a surprise, though. This is the same recovery we’ve grown to know and dislike so much these past six years. Employers keep increasing head counts and paychecks at only a slow and steady pace, with no sign of either picking up anytime soon. Now, in theory, this shouldn’t continue for much longer. Unemployment is finally low enough that companies should have to start competing over workers by paying them more. But that assumes we really are close to what economists call “full employment.”
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By Matt O’Brien