Today’s report from the Bureau of Labor Statistics showed the economy added 209,000 jobs in July. This brings average payroll employment growth to 184,000 in 2017 so far. This level of jobs growth this year has been on trend with the average we saw in 2016 (187,000). We need to add at least 223,000 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. At that faster pace, we would increase the speed at which we get to full employment. At the current rate, we are still steadily moving toward full employment.
Meanwhile, the unemployment rate fell slightly to 4.3 percent as more workers entered (or returned) to the labor market. The overall unemployment rate masks important differences for demographic subgroups. After a precipitous fall last month, the black unemployment rate bounced back up to 7.4 percent, and remains the highest level of any racial group. As is usually the case, youth unemployment remains far higher than average as well, coming in at 13.2 percent for July. Groups with typically higher unemployment rates stand to gain the most as we reach genuine full employment.
Turning to wages, year-over-year nominal wage growth held at 2.5 percent, very much 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 signs of inflationary pressure from wage growth and they should keep their foot off the brake. For more on wages and other economic indicators, check out EPI’s autopilot economy tracker to see how various labor market measures would perform each month if the economy continued inching towards full employment, as it has in the months and years leading up to 2017.
Overall, this morning’s report shows the recovery continues, 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 including young and old, and workers of all races can fully benefit from the economy.