Today’s report from the Bureau of Labor Statistics showed the economy added 222,000 jobs in June, with upward revisions of 47,000 to prior months. This brings average payroll employment growth to 180,000 in 2017 so far. The level of jobs growth this year has been a bit softer than the average we saw in 2016 (187,000), but I look forward to more months like June. We need to add at least 232,000 jobs per month over the next year to lower the unemployment rate to 4 percent and bring another million workers back in from the sidelines. So, if payroll employment can keep up this pace, we will increase the speed at which we get to full employment then what we’ve been seeing.
Meanwhile, the unemployment rate ticked up to 4.4 percent, but this happened for the right reasons. The labor force participation rate rose slightly to 62.8 percent percentage points and the employment-to-population ratio also rose slightly to 60.1 percentage points. While the unemployment rates for workers of color remain far higher than for white non-Hispanic workers, the black unemployment rate has been falling faster than overall unemployment over the last year.
Turning to wages, year-over-year nominal wage growth held at 2.5 percent, in line with recent months. This is below the targeted growth rate of 3.5 percent. At the current rate of growth, it is clear that employers need to do little to attract and retain the workers they want and any significant signs of labor shortages are simply not showing up in the data. At 2.5 percent wage growth, the Federal Reserve should get the message that there is still no worrying sign of inflationary pressure from wage growth and they should continue to let the economy recover. Overall, this morning’s report shows a recovery continuing to chug along, but with wage growth below target levels, it is abundantly clear that we have a ways to go before we reach genuine full employment—where workers see better wage growth and workers who have been sitting on the sidelines see better job opportunities.