Below, EPI economists offer their insights on the jobs report released this morning, which showed 254,000 jobs added in September.

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Political debates about the impact of immigration on the economy have often been at odds with the facts. But the consensus is surprisingly uncontroversial among economists: Immigration expands and strengthens the economy.

The Economic Policy Institute and the Immigration Research Initiative have come together to synthesize some of the most essential facts on immigration, immigrant workers, and the economy in a one-page fact sheet. We will co-release additional fact sheets summarizing state-by-state economic impacts in the coming days.

The fact sheets highlight the reality of how immigration benefits the economy and all workers. For example:

• Immigrant workers are a major and vital component of the U.S. workforce across occupations and industries, many of which would struggle without their contributions.
• Immigration expands U.S. Gross Domestic Product and is good for growth.
• Immigration overall has led to better—not worse—wages and work opportunities for U.S.-born workers.
• Immigration is enabling the United States to see continued economic growth despite an aging U.S.-born population and shrinking number of prime-age working adults.
• Immigrants play a key role in health care and home care jobs that help ensure retirement with dignity for seniors and independent living for people with disabilities.
• People who immigrate to the United States increase the economy’s stock of human capital and ideas, two crucial ingredients for long-run economic growth.

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It is indisputable that the U.S. labor market is strong. The share of the population ages 25–54 with a job is at a 23-year high, median household incomes rose 4.0% last year, and real wage growth over the last four years has been broad-based and strong. The economy has not only regained the nearly 22 million jobs lost in the pandemic recession, but also added another 6.5 million.

Are some folks still having a hard time? Absolutely. Even when the unemployment rate is low, there are still sidelined workers, and it remains difficult for many families to make ends meet on wages that are still too low. Unfortunately, that’s a long-term phenomenon stemming from a too-stingy U.S. welfare state, rising inequality, and the legacy of anemic wage growth during past economic recoveries. But when comparing the labor market with four years ago (during the pandemic recession) or even before the pandemic began, the answer is clear: More workers have jobs and wages are beating inflation by solid margins.

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The Federal Reserve belatedly began cutting interest rates two weeks ago, putting a quasi-official stamp on the “soft landing” with inflation nearly being brought down to the Fed’s long-run 2% target without any substantial weakening of the labor market. This milestone seems like a natural time to assess how well macroeconomic managers handled the past four years.

The answer—underappreciated by far too many—is very well!

In a nutshell, the Biden-Harris administration pushed a frontloaded and significant fiscal stimulus as the first major priority of their administration. The Federal Reserve accommodated this stimulus early on, and then began raising interest rates (more sharply than I would have) to try to rein in inflation. But they wisely never followed the advice of many to “keep raising rates until something breaks.”

In short, a return to full employment was prioritized in the Biden-Harris fiscal approach, and the value of low unemployment was clearly appreciated by the Fed. The results of this approach have been a clear success. There is no other plausible set of decisions about fiscal policy and interest rates over the past four years that would have led to lower inflation yet still would have seen real (inflation-adjusted) wages as high as today or as many people employed. That means there is no real argument against the assessment that macroeconomic policy has been a success.

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Absent federal action, states and localities have expanded workers’ ability to earn paid sick leave to care for themselves and their families. The results of these efforts over the past dozen years are clear: there have been significant gains in access to paid sick time among private-sector workers. The latest data released this morning from the Bureau of Labor Statistics show that these trends continued into 2024: 79% of private-sector workers have the ability to earn paid sick leave, an increase from 63% in 2012.

While these gains are welcome news for millions of working families, access to paid sick leave remains vastly unequal. As shown in Figure A, higher-wage workers have greater access to paid sick days than lower-wage workers. Among the 25% of private-sector workers with the highest wages, 94% have access to paid sick days. By contrast, among the 25% of workers with the lowest wages, only 58% have access to paid sick days. Prior releases have shown that the bottom 10% fare even worse, with only 39% having access to paid sick days in 2023 (though their access has improved, likely from state action).

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Better late than never, the Federal Reserve will almost surely cut interest rates at the Federal Open Market Committee (FOMC) meeting later this week. This cut is too long in coming—disinflationary pressures have been apparent in the economy for almost two years by now. In essence, the Fed decided to discount these disinflationary pressures and to only cut rates when inflation was not just falling rapidly, but was also low and extremely close to their 2% target. This approach took on far too much risk of throwing the economy into a totally unnecessary recession by keeping interest rates too high for too long. So far, a recession or damaging slowdown has thankfully been avoided, but there has been some notable labor market softening in recent months. Given all of this, the Fed should see its job now as quickly getting much closer to neutral on interest rates. This means cutting by at least 2 percentage points over the next year—so a cut of 50 basis points this week would be a better start than 25.

Background on interest rates compared with 2019

The effective federal funds rate today sits between 5.25-5.5%. In 2019, right before the pandemic hit, it sat between 1.5-1.75% (after a recent cut). Estimates of the “neutral” federal funds rate—the rate that is neither providing stimulus and inflationary pressure to the economy nor is it providing contraction and deflationary pressure—is roughly 2.5-3.5%. The neutral rate is often presented in real (inflation-adjusted) terms, with the inflation assumption being that the Fed is hitting its 2% target. That means a 1% real neutral rate should be read generally as a 3% nominal effective federal funds rate.

Figure A below shows one estimate of the neutral federal funds rate as well as the actual rate in recent years. By all estimates, today’s effective federal funds rate is far from neutral—it is clearly in contractionary territory. And by almost all estimates, the 2019 effective federal funds rate was far from neutral—clearly in stimulative territory.

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Although recent headlines claim that immigration is historically high or even “unprecedented,” new U.S. Census Bureau data show that immigration flows were relatively high but not unprecedented between 2022 and 2023, and were below the historical peaks in the late 1990s. These flows of new immigrants will benefit both immigrants and U.S.-born workers, as shown by many examples of credible economic research—though these benefits could significantly expand and help more workers if immigration policies were reformed to ensure that immigrants are granted full rights as workers in the U.S. economy.

The most recent estimates from the American Community Survey (ACS) indicate that the number of immigrants residing in the United States grew by 3.6% between 2022 and 2023 (see Figure A). This is below the historical peaks of 5.5% annual growth in the immigrant population that the United States experienced between 1994 and 2000, according to Current Population Survey (CPS) data.1 More recent CPS data show that the 2022–2023 immigrant population growth rate was 3.7%, similar to ACS estimates.

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Today’s Census Bureau data on earnings, income, and poverty in 2023 confirmed many of the predictions made in our preview last week. The strong labor market and falling inflation translated into increases in real median household income and decreases in the official poverty rate.

Real (inflation-adjusted) median household income increased by 4.0% to $80,610, the first increase since the pandemic. Between 2022 and 2023, the labor market added 3.5 million jobs while real wages increased. Considering most households rely on income from work to make ends meet, it’s no surprise that median household income increased in 2023.

Today’s data highlight the extraordinary strength of the recovery from the economic crises caused by the pandemic, a recovery driven by policy choices—particularly large fiscal relief and recovery packages—that aimed to quickly heal the labor market. The rapid growth of household incomes charted in today’s data is powerful evidence that the policy approach of recent years was the right choice.

Officially, median household income for 2023 is statistically indistinguishable from the last income peak of 2019. While that is the case in the official data, it is important to note that there were significant data collection issues in the survey for 2019 as responses were collected just as the pandemic hit in early 2020. The pandemic disruptions introduced significant “nonresponse bias”—meaning it was harder to talk to households to collect the data, and the households who were harder to reach were disproportionately lower income. This nonresponse bias boosted income measures in 2019 artificially. Census Bureau researchers subsequently estimated that this bias meant that real median income was 2.8% lower in 2019 than reported in the initial release. If we applied this data correction to income levels in 2019, this would mean that real household incomes in 2023 rose above 2019 levels and are now at their highest level on record.

Other welcome news include that income for lower-income households rose faster than for those at the median or at the top. Income for the 10^th-percentile household increased 6.7% between 2022 and 2023. Income for high-income households—at the 90th percentile—rose 4.6%. This significant increase for lower-income households led to a drop in the official poverty rate of 0.4 percentage points to 11.1% in 2023.

Two things are true right now for the U.S. economy: 

• The labor market is extraordinarily strong when judged by any historical benchmark. 

• The Federal Reserve is behind the curve in cutting interest rates and should start cutting them at the Federal Open Market Committee (FOMC) meeting next week, aiming for something like a federal funds rate that is at least two percentage points lower by mid-2025. 

These might strike some as being in tension—normally we want the Fed to cut interest rates to stimulate a weak economy. Why then, if the labor market is quite strong, do we need them to cut?  

Simply put, the interest rates the Fed controls are now at levels that are highly contractionary—they are rates you would want if your goal was to substantially slow the pace of aggregate demand growth (say because you were trying to quickly reduce inflation). There’s a whole debate to be had about whether or not the Fed should have raised rates this high and this fast in an effort to combat the post-pandemic inflation, but regardless of where you landed in that debate, it seems far clearer that today’s economy does not need a rapid reduction in aggregate demand.  

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There is always a great deal of political heat around minimum wage increases, largely driven by concerns about job losses. After a minimum wage increase, the story goes, many employers will not be able to afford to pay their workers the new higher minimum wage and will therefore shrink their payrolls. If these job losses are large enough, they could even swamp the higher wages and lead to lower overall wage income for the entire group of affected workers.

Actual evidence shows that this narrative is largely wrong. A new review that I co-authored with Arindrajit Dube finds that most minimum wage studies find no job losses or only small disemployment effects. In other words, the vast majority of minimum wage research implies that minimum wage policies have unambiguously raised the total earnings of low-wage workers.

This conclusion is strengthened by focusing on the studies that examine broad groups of low-wage workers or the overall workforce, not just narrow segments like teenagers. As the figure below shows, the median employment response is essentially zero among these more comprehensive studies, with 90% of these studies finding no or only small disemployment effects.

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Between 2022 and 2023, the unemployment rate held steady at 3.6% as the labor market added 3.5 million jobs. Over the same period, wages rose faster than inflation—which fell nearly in half. Upcoming Census Bureau data for 2023—set to be released on Tuesday—will reflect how these factors impacted annual earnings, income, and poverty of workers, families, and children across the country.

In 2022, the poverty rate increased and incomes fell as high inflation and the loss of pandemic-era safety net programs overshadowed labor market improvements. Even though those safety net programs have not returned, the Census data will likely show that a continued strong labor market coupled with falling inflation meant that livings standards increased among U.S. households in 2023.

In this blog post, we find:

1. The labor market continued to pull workers off the sidelines as job growth was strong across demographic groups, particularly for those often left behind by economic growth.
2. After spiking in 2022, inflation dropped sharply in 2023, far faster than the milder deceleration in nominal hourly and weekly wages. Real—inflation-adjusted—wages rose between 2022 and 2023, particularly among lower-wage workers, women, and Black workers.

The labor market recovery strengthened in 2023

The labor market experienced a tremendous bounceback from the depths of the pandemic recession. Large-scale policy interventions early in the recovery, such as expanded unemployment benefits and economic impact payments, helped families stay afloat and drove a recovery several times faster than the drawn-out recovery from the Great Recession. This strong fiscal boost is why it took just two years to regain the pre-pandemic prime-age employment-to-population ratio (EPOP)—the share of the population 25–54 years old with a job—compared with about 10 years to reach the same point following the Great Recession.

Figure A illustrates that the labor market continued to expand for workers in 2023. Even as the low unemployment rate held steady at 3.6%, the share of the population with a job grew, including for young adults (18–24 years old) and prime-age adults. 

Among prime-age workers, Black and women workers had the largest gains. In particular, Black men’s EPOP rose 1.7 percentage points and Hispanic women’s EPOP rose 1.5 percentage points between 2022 and 2023. Black and white women also experienced solid gains.

In fact, Black workers and women overall—including Black, Hispanic, and white women—experienced historically high employment rates in 2023. While disparities remain, this means that the stakes for a robust labor market recovery are even higher for historically marginalized groups. 

Inflation fell sharply in 2023—paving the way for real wage increases

Even though job growth was strong and unemployment fell sharply in 2022 from the year before, the inflationary spike of that year swamped much of those gains. Between 2022 and 2023, however, inflation fell nearly in half, from 7.7% to 3.9%. Figure B shows this sharp decline in inflation juxtaposed against the much slower deceleration in average hourly wages and weekly earnings. As a result, nominal wages exceeded price growth in 2023, causing real hourly wages to rise.

Average nominal weekly earnings—perhaps a better signal for the annual income data out next week—also increased faster than inflation between 2022 and 2023.

Real wages rose in 2023

Figure C illustrates real wage changes between 2022 and 2023 for select wage levels, educational attainment, and demographic characteristics. As with the last four years in general, lower-wage workers have experienced faster wage growth.

Very low-wage workers (10th percentile) and low-wage workers (20th percentile) saw strong wage growth of 4.4% and 2.6%, respectively. Workers with lower levels of formal educational attainment also experienced relatively faster wage growth. Taken together with expanding employment, these trends are a promising sign that poverty may have fallen in 2023. Unfortunately, the pandemic safety net measures so critical coming out of the recession have long since expired, dashing any hopes of returning to the historically low poverty rates of 2021 (as measured by the supplemental poverty measure which includes those additional income sources).

While slower than the tremendous growth for lower-wage workers, middle-wage workers—the average of the 40th to 60th percentiles—saw their hourly pay rise by 0.9%. As with employment opportunities, the strongest middle-wage growth was among Black workers and women workers, each increasing 1.1% over the year.

Overall, I’m optimistic that a growing labor market, falling inflation, and rising wages will lead to a solid Census report on earnings, incomes, and poverty. Hopefully the stronger growth among historically disadvantaged groups will mean some shrinking of persistent large disparities.

Below, EPI economists offers their insights on the jobs report released this morning, which showed 142,000 jobs added in August.

From EPI senior economist, Elise Gould (@eliselgould):

Read the full thread here. 

A slow down in job growth is expected as we approach full employment. By all measures, we are still in a strong labor market, but the Fed needs to lower interest rates to levels consistent with where we are in terms of inflation and trends in key labor market metrics.

— Elise Gould (@eliselgould) September 6, 2024

Nominal wage growth is strong, but remains fully consistent with the Fed’s inflation targets. pic.twitter.com/zXeFOZDuM0

— Elise Gould (@eliselgould) September 6, 2024

From EPI economist, Hilary Wething (@hilweth): 

This #Jobs report really highlights why we shouldn’t take any single data point too seriously–instead look at the trend and put estimates in context with multiple measures. For ex: the spike in temp layoffs we saw last month was totally reversed this month! https://t.co/6BWlEtt3Uw

— Hilary Wething (@hilweth) September 6, 2024

Last week, the Bureau of Economic Analysis released data on corporate profits in the second quarter of 2024. Perhaps surprisingly, profit margins still have not started moving meaningfully closer to pre-pandemic norms. Given ongoing debates about the relationship between recent years’ price inflation and corporate profits, this blog post reiterates a few points while incorporating new data.

• A spike in profit margins contributed significantly to inflation in the early part of the pandemic recovery, and likely contributed to even more persistent inflationary pressure by helping spur a countervailing rise in nominal wage growth. For example, rising profits explained well over 40% of the rise in the price level between the end of 2019 and mid-2022, compared with profits normally accounting for about 11-12% of prices.
• The profit spike was overwhelmingly due to pandemic distortions (shifting demand rapidly across sectors) and supply chain snarls (exacerbated by the Russian invasion of Ukraine) that granted many producers temporary monopoly power in key sectors.
  • Contrary to many influential economic writers and commentators, it is simply wrong to label the correlation between high profit margins and high inflation as simple evidence of an overheated economy. The overwhelming post-World War II evidence is that profit shares fall, not rise, as economies heat up.
• Corporate power absolutely conditioned how the post-pandemic inflation happened.
  • Corporate concentration likely did not increase during the post-pandemic recovery, and concentration over the previous decade was unlikely to by itself explain much of the post-pandemic inflation.
  • But the economic and policy context of the post-pandemic recovery saw corporate power dramatically change how it was deployed to maintain and expand profits—instead of suppressing wages, they raised prices. If this episode increases public support for measures that constrain excess corporate power, that would be good even if it has little relevance for inflation in the future.

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There is a well-documented shortage of qualified candidates willing to teach in public schools at current compensation levels. But there is also a relative shortage of Black, Hispanic, and Asian-American Pacific Islander (AAPI) teachers. In this post, we measure this relative shortage of teachers by race and ethnicity by comparing the current teacher labor force to the current enrollment of school-aged children. We document a significant demographic mismatch between public school teachers and students, and we describe a substantial body of research indicating that narrowing this demographic mismatch could have educational benefits for Black, Hispanic, and AAPI students. 

In 2023, almost half of U.S. K–12 students were Black, Hispanic, or AAPI, while only a quarter of teachers identified in the same way (Figure A). This large disparity has major implications for education policy. 

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Below, EPI economists offers their insights on the jobs report released this morning, which showed 114,000 jobs added in July. Read the full thread here. 

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In the midst of record-breaking heat waves this summer, workers are facing the risk of heat-related injury, illness, and even death. In fact, heat has become the most prevalent lethal factor among all weather-related fatalities, according to the National Weather Service. To address the threat to worker safety and lives posed by rising global climate trends, the Biden-Harris administration recently announced a proposed rule to substantially reduce heat injuries, illnesses, and deaths in the workplace. The proposed rule would be “the first-ever federal regulation on heat stress in the workplace.”

The proposed rule would require employers to conduct heat hazardous identification and assessment, develop a heat injury and illness prevention plan, provide indoor work area control, and allocate time and area for rest breaks. The rule also would require employers to provide training and education in their workplace.

The new standard has two heat index triggers that apply nationwide. When temperatures reach 80 degrees Fahrenheit, the proposal would require employers to provide workers with drinking water, as well as a place and time to take breaks and help employees acclimatize to working in extreme heat. When temperatures reach 90 degrees Fahrenheit, employers would be required to provide employees with 15-minute rest breaks every two hours and monitor for symptoms of heat-related illnesses.

By establishing a federal standard, the proposed rule would benefit a vast number of U.S. workers and enhance equity. According to the Bureau of Labor Statistics, 33% of workers in 2023 were exposed to the outdoors as a regular part of their job. Furthermore, Black, African American, Hispanic, or Latino workers—who make up roughly 32% of the U.S. population—comprise 45% of all workers in outdoor conditions.

2024 could be the hottest year on record. Worsening climatic conditions mean that workers who work outdoors and indoors in high temperatures are more at risk. The proposed rule is therefore a necessary policy effort to protect workers amid the ongoing global climate crisis.

With the latest indicators showing consumer price inflation continues moderating from its June 2022 peak, prices for some goods have actually fallen over the past few years, according to underlying commodity data from the Bureau of Labor Statistics.

Consumers are seeing the biggest improvements in energy prices, as shown in Figure A below. Families filling up their oil tank for the winter ahead will be paying 36% less for heating fuel compared with prices in mid-2022. Gasoline is down 29% and heating and cooking gas is down 15%.

Families shopping for a new washer and dryer will see prices 10% lower than two years ago. At the market, they’ll be paying 8% less for apples, 3% less for milk and bacon, and 1% less for tomatoes. Prices for boys’ and girls’ shoes are 2% lower than two years ago.

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The nation’s third-largest public school system—Chicago Public Schools (CPS)—has begun developing its budget for the next fiscal year. Like the rest of the country’s schools, this budget marks the end of the district’s financial support from the Elementary and Secondary Schools Emergency Relief III Funds (ESSER III) provided during the COVID crisis. CPS invested its ESSER dollars in school staff, and it was the right choice: Chicago students had exceptional academic outcomes compared with similar districts during the pandemic recovery.

Public schools, especially schools that serve students of color, are facing severe staffing shortages that threaten students’ ability to learn. Even with the staffing improvements made possible by COVID-related fiscal relief, CPS per-pupil spending levels are not sufficient to meet recognized educational adequacy benchmarks. CPS’s 2025 budget should target maintaining recent spending levels to support the recruitment and retention of qualified staff, particularly in low-income neighborhoods and schools that serve students of color.

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Below, EPI senior economist Elise Gould offers her insights on the jobs report released this morning, which showed 206,000 jobs added in June. Read the full thread here. 

Payroll employment increased by 206,000 in June, with notable downward revisions in the prior two months. Employment growth is expected to slow as the labor market approaches full employment. The Federal Reserve should get a clear message that we are not in a hot labor market. pic.twitter.com/aQwRkGrh3A

— Elise Gould (@eliselgould) July 5, 2024

June’s gain of 206,000 jobs is on par with the average gain over the prior 12 months. There were notable increases in health care and social assistance as well as in public sector employment, primarily at the state and local level. pic.twitter.com/Reed6bxxfK

— Elise Gould (@eliselgould) July 5, 2024

While there’s more volatility in monthly and quarterly changes in wages, the deceleration in nominal wage growth is clear across all measures. There is no evidence of inflationary pressures coming from the labor market. pic.twitter.com/i7nKjjVY5I

— Elise Gould (@eliselgould) July 5, 2024

Much of the employment gains appear to be driven by men as their prime-age employment-to-population ratio rose, getting closer to their pre-pandemic levels. Prime-age women experienced some declines in June, but remain above their pre-pandemic high. pic.twitter.com/7l5ZrgGNSh

— Elise Gould (@eliselgould) July 5, 2024

Over the last few months, some have expressed concern over mild softening in certain labor market measures. For instance, after hitting a low of 3.4% in 2023, the unemployment rate slowly crept back up to 4.0% in May 2024. Ideally, unemployment would remain as low as possible, but unemployment has now been at or below 4.0% for 30 months running—the longest such stretch since the late 1960s. To put some of this in perspective, I’ve made a few comparisons with pre-pandemic unemployment and employment rates to show just how well today’s labor market stacks up. Spoiler: Even while some measures have softened a bit from peaks in 2022 and 2023, the overall picture remains stronger than what we saw in 2019. 

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Black and brown people face racial discrimination based on their hair texture at work, school, and beyond, but a growing number of states are passing legislation to protect against hair discrimination. July 3 marks five years since the signing of the inaugural state CROWN (“Creating a Respectful and Open World for Natural Hair”) Act. Now, 25 states in total have passed the CROWN Act, with Vermont becoming the latest state to enact the legislation in April. Meanwhile Kentucky Governor Andy Beshear (D) signed an executive order to protect against hair-based discrimination for state government workers and job applicants, which helps build momentum for legislation that would protect everyone. The map below illustrates which states have passed the CROWN Act (D.C. has protections against hair discrimination but not through the CROWN Act).

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As our economy and nation become increasingly more diverse and multilingual, limited language access to public services and institutions poses a growing threat to limited English proficient (LEP) workers. Although federal law mandates that federal agencies—as well as state and local programs receiving federal funds—establish language access plans for their resources, many non-federally funded state and local programs lack this level of accountability. For LEP workers, this can create significant barriers to understanding and exercising their rights across a complicated web of social, political, and economic institutions.

Asian American and Pacific Islander (AAPI) communities have particularly high rates of limited English proficiency, with Asian Americans—the only racial group that is predominantly foreign-born—having the greatest need for language assistance. Approximately 32% of Asian Americans are LEP or are categorized as speaking English “less than very well.” By comparison, 29% of the Latinx community and 12.2% of Native Hawaiian and Pacific Islanders are LEP, respectively.

The 24 million AAPI individuals residing in the United States reflect a multitude of complex and challenging histories that shape their diverse experiences in this country, including English language proficiency. Factors such as the promise of economic opportunities, the economic and political instability in their home countries, and the domestic devastation from imperial, colonial, and military expansion all contributed to reasons for AAPI groups to migrate to the United States. Between the 19^th and first half of the 20^th century, Asian immigrants were subjected to a plethora of immigration restrictions and racial exclusion policies, revealing deep-seated prejudices and economic anxieties. Additionally, the various Pacific Island nations that were colonized, overthrown, and annexed by the United States and other colonial powers each developed mixed relationships with U.S. political and economic systems because of their different colonial and territorial statuses.

More recent Asian immigrants have entered the United States through various immigration channels, including Diversity Visas, H-1B employment visas, and Temporary Protected Status (TPS), while many others have arrived as refugees. Despite these pathways, still more than 1.7 million Asian Americans are undocumented immigrants, further compounding the marginalization experienced by those whose primary language is not English.

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Click here for the latest version of our 50-state maps showing the status of legislation to roll back or strengthen child labor protections.

Early this year, we detailed the continued state legislative attacks on child labor protections as well as bills to strengthen child labor standards. Despite the recent rise of child labor violations and several high-profile child labor cases, the industry-backed effort to roll back child labor protections state by state continued, with state bills targeting youth work permits, work hours, and protections from hazardous work. At the same time, many state legislators have recognized the urgent need to strengthen standards and have instead proposed legislation to improve state child labor laws and their enforcement.

Now that most state legislative sessions have ended for the year, here is a look back at how these child labor proposals fared.

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Below, EPI economists offer their insights on the jobs report released this morning, which showed 272,000 jobs added in May.

From EPI senior economist, Elise Gould (@eliselgould):

Read the full thread here. 

Jobs report comes in strong this morning with payroll employment increasing by 272,000 in May. Some notable weakness in the household survey, but most measures tell a consistent story of a strong but not hot labor market. Here, we see consistently strong job growth continuing. pic.twitter.com/g9ilEKcxGK

— Elise Gould (@eliselgould) June 7, 2024

The topline household survey numbers suggest some mild weakness though it's important to remember that the payroll survey is the gold standard.

I'm not concerned by the mild uptick in the unemployment rate to 4.0%, which has remained at or below 4.0% for 30 months in a row. pic.twitter.com/Z7erPObbYm

— Elise Gould (@eliselgould) June 7, 2024

Again, a more volatile series, the Black unemployment rate ticked up to 6.1% in May.

Getting to full employment is particularly important for historically disadvantaged groups (e.g. young, noncollege, Black and Hispanic workers) who always experience a tougher labor market. pic.twitter.com/bs2jSJ6skh

— Elise Gould (@eliselgould) June 7, 2024

From EPI president, Heidi Shierholz (@hshierholz):

This labor market just keeps cranking out huge numbers of jobs. We’ve added almost a million jobs in the last 4 months alone, and the unemployment rate has been at 4% or less for TWO AND A HALF YEARS. It really is incredible.

— Heidi Shierholz (@hshierholz) June 7, 2024

Over the last few months, there’s been much talk about the return to normal in the labor market. A normal rate of job openings, hires, and quits. Unemployment back to pre-pandemic levels for a sustained period and the stability of the prime-age employment-to-population ratio at an even slightly higher rate than pre-pandemic. Will a return to “normal” also mean wages for the vast majority rise slower and that those with more power exert their leverage through faster wage gains? Recent evidence shows a worrying trend emerge: Wage growth for production/nonsupervisory workers has slowed while manager wage growth has mildly accelerated.

Over much of the current economic recovery, lower-wage workers experienced faster wage growth than other groups. They lost their jobs in greater numbers during the pandemic, but a policy response that matched the scale of the problem translated into a tremendous bounceback in jobs. It also meant that workers who lost their jobs weren’t as desperate to take the first one when those jobs returned. Employers had to scramble to attract and retain workers, leading to faster wage growth for those lower-wage workers with historically less bargaining power.

A similar—though more muted—phenomenon happened for production/nonsupervisory workers (roughly the bottom 82% of the wage distribution). Hourly wages for production/nonsupervisory workers started growing faster than overall private-sector wages in mid-2021, as shown in Figure A below. By March 2022, year-over-year hourly wages grew 7.0% for production/nonsupervisory workers, compared with 5.9% overall. Over the last two years, nominal wage growth for both groups of workers has decelerated, but the deceleration is more pronounced among production/nonsupervisory workers. The latest April 2024 data show that production/nonsupervisory workers are still experiencing slightly faster year-over-year wage growth than the overall private sector, but that’s likely to reverse soon given recent trends.

Further, we can impute average hourly wages for managers using their shares of the overall private-sector workforce and the wages for overall private and production/nonsupervisory workers. When we do that, we see a mild acceleration in managerial wage growth over the last few months, though the series is notably volatile (see Figure B). This wage differential between typical workers and managers will be important to watch in Friday’s jobs report as well as future months. While the return to normal may be welcome in other metrics, it would not be welcome to see managerial pay growth exceeding growth for non-managers such that rising inequality rears its ugly head again.