This morning’s report from the Bureau of Labor Statistics showed that the economy added 156,000 jobs in August—lower than July (which was revised down to 189,000) and slightly softer than what we have seen for most of this year (176,000). That said, this level is still more than enough to bring workers off the sidelines and have them participating in the economy.
The unemployment rate rose slightly to 4.4 percent, and not because more workers were looking for work: labor force participation held steady, while the employment-to-population ratio fell slightly. Though it tends to be a more volatile series, so we shouldn’t make too much out of one month, but black unemployment rose for the second month in a row. Nominal wages, meanwhile, grew 2.5 percent over the last 12 months—where they have been for the last several months. This level of wage growth is below the rate of 3.5-4 percent that we would see in a healthier economy.
When the Federal Reserve meets in September, they should take a hard look at the data, which right now shows it’s too soon to raise interest rates. If they throttle the economy too quickly, working people will stay on the sidelines or won’t get the raises they need.
Labor Day is Monday, a celebration of working people and a reminder that these numbers are not an abstraction, they’re a sign of whether or not people can find jobs and whether those jobs pay good wages. The decline of unions means that workers require the tightest of labor markets to see improvements in their wages and working conditions—clearly we are not there yet.