The July jobs report shows continued steady growth, and the previous two months were revised upwards. Despite this continued improvement in job growth — normally a positive factor in driving up wages — wages continued to stagnate.
I addressed this “new economy” in which more and more jobs are being displaced by technological innovations, mechanization and computerization in last month’s post. June jobs report continues steady growth. This is a factor holding down wages.
Economics is an inexact science, and the “rules” that may have been true for the “old” economy of the 20th Century may no longer be true for the “new” economy of the 21st Century. Economists have yet to come up with a sound explanation for this anomalous wage stagnation under prevailing economic theory.
Steve Benen has the July jobs report. Job growth remains on track, jobless rate at seven-year low:
The new report from Bureau of Labor Statistics shows the U.S. economy added 215,000 jobs in July, roughly in line with expectation. The overall unemployment rate remained at 5.3%, which is still its lowest point since April 2008, more than seven years ago.
The revisions also point in a fairly encouraging direction. May’s job totals were revised up, from 254,000 to 260,000, while June’s numbers were also revised up, from 223,000 to 231,000. Those are modest increases, to be sure, but it’s better than the alternative. The same report also showed a slight increase in wages.
I can appreciate why job totals like these seem a little dull. Lately, it seems most monthly reports on jobs show roughly the same thing: growth around +200k and low unemployment. But let’s not take good news for granted, because it wasn’t that long ago that the country was desperate for news like this. What’s ho-hum in August 2015 would have produced dancing in the streets in August 2009.
Overall, the U.S. has added 2.91 million jobs over the last 12 months, which is excellent. July was the 58th consecutive month of positive job growth — the best stretch since 1939 — and the 65th consecutive month in which we’ve seen private-sector job growth, which is the longest on record.
Here’s another chart, this one showing monthly job losses/gains in just the private sector since the start of the Great Recession.
Meteor Blades at Daily Kos adds some additional numbers. Government reports 215,000 new jobs added in July; official unemployment rate holds at 5.3%:
[W]ages once again [are] nearly flat, rising just 0.2 percent over June. A week ago, the Department of Labor reported that U.S. wages and salaries rose 0.2 percent in the second quarter, the slowest pace on record since records began in 1982.
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The official unemployment rate—which the BLS labels U3—remained at 5.3 percent. The bureau also measures both unemployment and underemployment, which it labels U6. This includes people with no job at all, part-time workers who want full-time jobs but can’t find one, and many “discouraged” workers. That fell in July to 10.4 percent.
The civilian workforce rose by 69,000, after having fallen 432,000 in June. The employment-population ratio remained at 59.3 percent, and labor force participation was also unchanged at 62.6 percent.
Many analysts now speculate that the report was good enough to boost the chances that the Fed will raise interest rates at its September meeting. But there is one more jobs report before that meeting.
Last month Fed Chair Janet Yellen Told House Panel Interest Rate Hike Likely Later This Year. If wages remain stagnant and consumer price inflation remains low, there are no factors justifying raising interest rates.
UPDATE: Sen. John Kavanagh likes to pretend that he knows something about economics (see his comment below). He would have you believe that manufacturing jobs in the U.S. have been disappearing only since 2007. Those of us who are old enough to have lived through the deindustrialization of America that began in the 1960s with textile plants and steel mills being outsourced to foreign countries so that corporations could exploit cheap labor with slave wages know better. There are entire cities in America’s industrial heartland that were once thriving communities that were reduced to blighted ghost towns as their employment base disappeared — all in the name of pursuing higher profits to satisfy vulture capitalist investors.
Trade agreements, tax policies and fiscal policies of the U.S. adopted in the 1980s to today actually encouraged this policy of deindustrialization and off-shoring of American manufacturing jobs. There are numerous economic studies and books that have been written about this topic. Mr. Kavanagh should assign himself some summer reading.
Below is the official chart from the Federal Reserve Bank of St. Louis showing the number of manufacturing jobs in the U.S. from 1940 to July 2015. All Employees: Manufacturing – FRED – St. Louis Fed (interactive graphic). You will note that there was an uptick in manufacturing jobs from 1993-1998 during the Clinton administration prior to the “Tech bubble” collapse beginning in 2000. This was followed by a steep, massive decline in manufacturing jobs during the Bush administration, concluding with the Bush Great Recession that began in December 2007 and ended in June 2009. Manufacturing jobs bottomed out in March of 2010. Since then there has been a slow but steady increase in manufacturing jobs in the U.S. under the Obama administration — Sen. Kavanagh’s revisionist history notwithstanding.