Thread by @eliselgould

Job growth stays solid but wages disappoint—again
epi.org/press/job-grow…
#JobsReport @EconomicPolicy 1/n

@EconomicPolicy Today’s jobs report showed that 164,000 jobs were added in July. After a couple of weak months this year, we are now seeing solid job growth for the last two months, even with sizable downward revisions for June (and continued losses in retail). 2/n

@EconomicPolicy Average employment growth this year so far has been notably slower (165,000) than last year’s average growth (223,000). Federal employment was expected to be impacted by the Census hiring—but the data show that non-postal federal employment increased by only 2,500 in July.
3/n

@EconomicPolicy The unemployment rate remained at 3.7%. Labor force participation and the share of the population with a job each increased 0.1 percentage points, a sign that slowly more and more workers are drawn back into the labor force in search of (and in many cases finding) jobs.
4/n

@EconomicPolicy The overall unemployment rate of 3.7% masks important differences. Imagine if the overall looked like the unemployment rate for black workers (6.0%). This country would be having a very different conversation on the economy.
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@EconomicPolicy The prime-working age population (25–54 years old) saw some losses in July; both the prime-age labor force participation rate and the employment-to-population ratio fell 0.2 percentage points. Neither series has seen sustained improvement since last summer.
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@EconomicPolicy Wage growth continues to fall short of what we’d expect in an economy that has had historically low unemployment—the unemployment rate has been at (or below) 4.0% for the past 17 months.
7/n

@EconomicPolicy Nominal wages grew 3.2% in July over last year, remaining below levels consistent with Federal Reserve’s target for inflation and long-term potential productivity growth.
epi.org/nominal-wage-t…
8/n

@EconomicPolicy Recent data releases have provided ample evidence of a slowdown in the U.S. economy (epi.org/press/investme…), as well as a slowdown in nominal wage growth (epi.org/blog/not-just-…).
via @joshbivens_DC @EconomicPolicy
9/n

@EconomicPolicy @joshbivens_DC Taken together, this week’s decision by the Federal Reserve to cut short-term interest rates by a quarter-point makes lots of sense.
federalreserve.gov/monetarypolicy…
10/n

@EconomicPolicy @joshbivens_DC Disappointing wage growth is not a new feature of the U.S. economy. According to data released this week, hourly pay has continued to diverge from economy-wide productivity. Since 1979, productivity has risen 6x faster than hourly compensation for the typical U.S. worker.
11/n

@EconomicPolicy @joshbivens_DC There's another survey that allows us to look at some of the latest wage trends. Using the Current Population Survey (CPS), we can see what’s happening across the wage distribution as well as growth by various demographic characteristics.
12/n

@EconomicPolicy @joshbivens_DC To be clear, the CES is one of the most reliable measures of wage growth because of its large sample size and benchmarking, but it only provides information on average wages for very large groups of workers. The CPS gives us texture at the cost of increased volatility. 13/n

@EconomicPolicy @joshbivens_DC Here, I examine 12-month pooled data for the year ending in June of each year, combining the first half data in the stated year with the second half data in the prior year. All wages are in 2019 dollars.
14/n

@EconomicPolicy @joshbivens_DC Compared to recent years, there appears to be somewhat more broadly based growth in wages across the distribution. The median finally is showing some signs of life, increasing 2.7% since last year, after a decline in between 2017 and 2018.
15/n

@EconomicPolicy @joshbivens_DC The notable weakness in the last year was for the lowest wage workers; the 10th percentile wage fell in real terms between 2018 and 2019 after rising an average of nearly 3% in the previous four years.
16/n

@EconomicPolicy @joshbivens_DC The drop in the 10th percentile is somewhat surprising. There are two factors driving wage gains at the bottom in the years before 2019: a tightening labor market AND state-level minimum wage increases over the last several years. epi.org/publication/wa…
17/n

@EconomicPolicy @joshbivens_DC EPI's epi.org/minimum-wage-t… suggests that some of the latest increases are not only on top of other recent increases in those same states but are now reaching a bit higher into the wage distribution and hence potentially bypassing workers at the (national) 10th percentile.
18/n

@EconomicPolicy @joshbivens_DC For example, the latest minimum wage changes in CA, MA, and WA increased the minimum from $11 to $12. And, the minimum wages in CO, OR, NY, ME, and AZ are at or above $11.

Even $11 an hour is higher than the 10th percentile of the national wage distribution (at $10.02).

19/n

@EconomicPolicy @joshbivens_DC So, the latest state-level minimum wage action may actually not be very well captured by the 10th percentile. Further, the drop in the 10th percentile over the last year was on the heels of relatively strong increases over the last four years.
20/n

@EconomicPolicy @joshbivens_DC On the other hand, the 20th percentile has done better over the last two years, and in fact exhibited the strongest growth (+2.6 percent annualized) over the last two years compared to any other decile, including the 95th percentile.
21/n

@EconomicPolicy @joshbivens_DC In general, the trends in wages for most workers over the last year, while welcome, still have left many of these workers just beginning to make up for lost ground. Rising wage inequality continues to be a defining feature of the American economy.
22/n

@EconomicPolicy @joshbivens_DC I'm often asked, why not more wage growth? Aside from the fact that eroding labor standards have meant that it takes a tighter and tighter labor market to see stronger wage growth, I'm convinced there are a lot more workers out there who want a job and aren't being counted.
23/n

@EconomicPolicy @joshbivens_DC Here's two pieces of evidence to support that claim.
1. The share of the prime-age population with a job is still below where it was in the peaks of the last two business cycles and hasn't showed sustained improvements since last summer.
24/n

@EconomicPolicy @joshbivens_DC 2. The share of newly employed workers who said that they were not actively searching for work in the previous month is at an all time high. This means those newly employed this month were not counted among the unemployed in last month's count.
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