The economy continued to show steady employment growth by gaining an additional 209,000 new jobs for the month of July, according to a federal report Friday.
President Donald Trump entered office with the labor market in the midst of up upswing. But there have still been fundamental issues that have lingered since the last recession roughly a decade ago. The Bureau of Labor Statistics (BLS) found in its latest jobs report that the positive growth continued with 209,000 new jobs.
“Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate was little changed at 4.3 percent,” the report states. “Employment increased in food services and drinking places, professional and business services, and health care.”
The last recession was sparked by the subprime mortgage crisis and the financial crisis of 2007. Former President Barack Obama oversaw an unusually slow recovery throughout his entire time in office. The labor market did see notable improvement in his final two years.
“If we look backwards we’ve had good steady growth. We’re seeing some increase in the labor force participation rate if you take into account the fact that there are more workers getting older and exiting for retirement,” Boston University Prof. Kevin Lang told InsideSources. “We’re probably getting some of those discouraged workers back in the labor force. The unemployment rate is holding.”
The unemployment rate has become one of the more positive labor market indicators. It currently stands close to full employment at 4.3 percent. The labor force participation rate, underemployment, and wage growth have been much less positive.
“It’s a huge conundrum,” Alec Levenson, a senior research scientist at the University of Southern California, told InsideSources. “If you look at the unemployment rate you’d think we couldn’t get any better. If you look at the labor force participation rate, we’d think things are pretty bad. And if you look at things like wage gains it feels pretty mediocre.”
Average wages increased by nine cents and now sit at $26.36 for the month of July. Wages in recent years have shown slow growth despite the positive trends. Employees typically see there wages rise as the labor market improves and there are less available people out of work. That trend hasn’t happened this time.
“We continue to have historically high levels of inequality,” said Lang, who teaches labor economics. “Wages have not been rising, that’s a big concern, of course. There are large pockets around the country and large groups that are not doing well.”
The labor force participation rate tracks the number of employed and those actively seeking work as a percentage of the total population. The participation rate factors in those who have suffered long-term joblessness. It has bottomed out after declining significantly since the recession. The participation rate now sits at 62.9 percent.
“If you look at the labor force participation rate, which I think is a pretty key variable here, things have pretty much stabilized over the last couple of years,” Florida State University Prof. Randall Holcombe told InsideSources. “I’m anticipating the labor force participation rate starting to ease back up just because the unemployment rate is so low.”
Lang adds the labor force participation rate is actually on the rise when retirees are taken into account. A large population of retirees and student adults can be blamed for much of the lower rate. The employment-to-population ratio for prime age adults has shown a much more noticeable improvement since the recession.
The Gross Domestic Product (GDP) is another indicator that has looked promising. It tracks the total dollar value of all goods and services produced over a specific time period. The Bureau of Economic Analysis (BEA) found in its advance estimates for quarter two last week that the growth rate improved to 2.6 percent.
The jobs report does not include farm workers, private household employees, or nonprofits.
