Tomorrow, the Bureau of Labor Statistics will release September’s numbers on the state of the labor market. As usual, I’ll be paying close attention to the prime-age employment-to-population ratio (EPOP) and nominal wages, which are two of the best indicators of labor market health. There will likely be discussion of whether or how September’s storms affected the data, and I lay out some those issues below. Last, Friday’s report will give us a chance to examine the “teacher gap”—the gap between local public education employment and what is needed to keep up with growth in the student population.

Falling unemployment

The unemployment rate has fallen steadily over the last seven years, and many have said that the current rate of 4.4 percent means we are back (or at least very close) to full employment—meaning that pushing unemployment any lower would cause inflation to accelerate above the Federal Reserve’s preferred 2 percent target. That is why some observers are calling upon the Fed to continue to raise rates, even though low unemployment has not translated into consistently strong nominal wage growth for workers across the economy.

The unemployment rate is only one indicator of labor market health—and other indicators, like the prime-age employment-to-population ratio (EPOP), suggest an economy with a fair amount of slack. When the economy first hit its current 4.4 percent unemployment rate in April 2017, I noted that, historically, an unemployment rate of 4.4 percent was associated with higher participation and employment in the labor market. In fact, based on the relationship between unemployment rates and prime-age EPOPs in the last two business cycles, the current prime-age EPOP of 78.4 should be 2.3 percentage points higher (80.7 percent). Unfortunately, its current rate is still below its lowest level in the last full business cycle. Nominal wage growth is another key indicator of labor market health. Year-over-year nominal wage growth has remained at 2.5 percent for the last several months, below target levels and where it would be expected in a stronger economy.

All told, the Fed was correct to resist further rate increases in their September meeting. Reaching genuine full employment should be the main concern of the Fed so that workers—white and black, young and old—see the benefits of tight labor markets in their job prospects and wages.

Hurricane effects

I want to take a minute to talk about the weather. While some amount of the typical hurricane season would be normally captured in the Bureau of Labor Statistics seasonal adjustment, 2017 has been unusually stormy. The reference period for September (as it is for every month) is the week (or pay period) that includes the 12th of that month. Therefore, Hurricane Harvey, which made landfall in Texas around August 25 and Louisiana around August 29, is outside the reference period. Reconstruction efforts are ongoing, which could lead to an uptick in construction and similar sectors. But, those effects will likely be negated by Hurricane Irma, which struck smack in the middle of the reference period (mostly September 9-13). While local weather is often not large enough to impact national numbers, it’s possible there will be a mild fall in economic activity. This may be more likely to be seen in a reduction in hours rather than overall employment levels. (Meanwhile, Hurricane Maria, while devastating, hit Puerto Rico after the reference period (around September 20) so should have no effect on September’s employment numbers. Furthermore, the two data surveys that are released as part of the monthly jobs report do not include Puerto Rico in the national numbers.)

The teacher gap

Lastly, Friday’s report will give us an opportunity to update our analysis of the teacher jobs gap. Thousands of local public education jobs were lost during the recession, and those losses continued deep into the official economic recovery, even as more students started school each year. This has been true of public sector jobs in general—continued austerity at all levels of government has been a drag on public sector employment, which has failed to keep up with population growth.

The costs of a significant teacher gap are measurable: larger class sizes, fewer teacher aides, fewer extracurricular activities, and changes to curricula. Last year, the local public education job shortfall remained large. On Friday, I will compare where jobs in public education should be, using the pre-recession ratio, student population growth, and the most recent jobs numbers.