The economy created another 215,000 new jobs in July, another tepid performance in a generally tepid economic recovery. We are continuing to reap the consequences of the conservative obstruction in Congress that has blocked the critical policies we need for real job growth and robust recovery.
The unemployment rate is stable at 5.3 percent, but the labor-force participation rate remains at the low level of 62.6 percent. Still, too many people who should be in the labor force are hanging back, because it would not be worth the effort to try to find a job. Confirmation of that impression came earlier in the latest monthly Job Openings and Labor Turnover report from the Labor Department. In May there were 5.4 million job openings, but there were 16 job seekers for every 10 job openings, according to an analysis by the Economic Policy Institute.
The weakness of the job market is also reflected in the 0.2 percent monthly wage growth, which amounts to annual wage growth of 2.4 percent. "Sluggish wage growth is the best evidence that the labor market isn’t close to overheating," wrote Chad Stone of the Center for Budget and Policy Priorities.
Ideal wage growth would be at least 3 percent a year; the current rate of wage growth barely allows average workers to keep pace with inflation. Keeping pace is not good enough given the years of wage stagnation rank-and-file workers have experienced.
In advance of the report, economist Elise Gould at the Economic Policy Institute wrote, "If anything, the recovery has been slowing: on average, only 208,000 jobs were added in the first six months of this year, compared to an average 281,000 in the last six months of 2014."
Some analysts counter that this slowing is the expected result of an economy approaching full employment. But this definition of "full employment" accepts a new normal that should be as manifestly unacceptable to policymakers as it is to the people pounding the pavement looking for work. This so-called closeness to full employment still leaves hundreds of communities where unemployment exceeds 7 percent and unemployment among African Americans in excess of 9 percent (still double that of white Americans) and just under 7 percent among Latinos.
The disconnect between the leading Republican candidates and the realities of working people was in sharp relief at Thursday's Fox News presidential debate. There was no real discussion of a plan to rebuild America's infrastructure, which would create millions of jobs and lead to the kind of tight labor market that would lead to a wage boost. There was no substantive discussion of how to address pockets of joblessness throughout the economy. There were a couple of mentions of wages, but no squaring of political rhetoric about favoring more working class wage growth and the effects of policies – constraints in government spending, opposition to minimum wage increases, actions to weaken union bargaining power – that the Republican candidates have supported.
The takeaway for the Democrats running for president is to resist taking credit for what has been an admittedly long "recovery" under President Obama's watch but to emphasize how much better it could have been if we even did the Obama administration's modest infrastructure investment plan – which was immediately smothered by Republicans in Congress – and stress that we still can do better with different leadership in Congress and the White House.
The takeaway for the Federal Reserve does not change from what we have said all this year: Do not risk short-circuiting job growth and wage growth by raising interest rates too soon. Federal Reserve chair Janet Yellen has shown wise caution in that regard up to now, defying the critics who want her to react to a nonexistent threat of inflation that they have been saying for years is "just around the corner." The people who want to jam on the economic brakes the moment inflation hits a 2 percent annual rate are not the people who have to struggle to find a job to feed their families; Yellen should continue to keep her focus on those people first.
