July jobs report: Stagnant wages
It’s Jobs Friday! This morning, the Bureau of Labor Statistics released data for non-farm payrolls for the month of July. The economy created 209,000 jobs last month and the unemployment rate ticked up to 6.2%. The headline number came in a bit under consensus (a Reuters poll of economists expected growth of 233,000), but was overall not a terrible number. The data today really preserves the status quo.
The Reuters Graphics team has recently debuted some really great jobs-related interactive charts. Here are some highlights:
There are a number of labor market indicators in this interactive, but wage growth is one of the data points that Fed chair Janet Yellen cares about most. Average hourly earnings grew by a single penny in July (to $24.45), and have grown just 2 percent over the past 12 months. This suggests that even though unemployment is coming down, the labor market is still weak. Theoretically, if there was healthy competition in the job market, companies would be offering higher wages, and we aren’t seeing that yet.
This chart has a lot going on, but that orange line, which has been going up pretty consistently since 2008, are the number of people who aren’t in the labor force in the U.S. Generally, an upward trend was to be expected as the Baby Boomers started to retire, but there’s still plenty of people in there that aren’t looking for jobs because they are discouraged and have dropped out of the labor market. The green line is the number of unemployed. It’s slowly but steadily coming down (although that’s a mix of people getting jobs and people dropping out of the labor force). The black line is number of jobs in the economy. We’re barely, barely ahead of where we were more than six years ago.