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 While the Labor Department's monthly employment report showed more
than 200,000 jobs created for the sixth straight month, wages were
about flat in the private sector and there was little improvement in
America's blight of long-term unemployment.
The report supported Fed Chair Janet Yellen's view that a sharp drop
in the unemployment rate over the last year has masked substantial
weakness in the labor market. That could give Yellen room to keep
interest rates at rock-bottom levels well into next year - without
inflation becoming a threat.
"We need more wage growth to see a pickup in inflation," said Ryan
Sweet, an economist at Moody's Analytics in West Chester,
Pennsylvania.
American workers, on average, earned $24.45 an hour in July, up only
a penny from June. Over the last year, wages have grown just 2
percent, in keeping with where they have been stuck since late 2009.
Before then, hourly earnings typically rose 3 percent or 4 percent a
year.
One reason to be pessimistic about wage growth is that more workers
appear to be searching for jobs.
The Labor Department said more than 300,000 Americans joined the
workforce last month. That was the main reason the jobless rate
ticked higher to 6.2 percent, and economists generally think a
larger pool of labor will make raises harder to come by.
"Yellen can argue that there are still few signs of tightness in the
labor market," said Jim Kochan, a market strategist at Wells Fargo
Funds Management in Menomonee Falls, Wisconsin.
The added workers in the labor force left a larger share of the
population either employed or looking for work, pushing the
so-called labor force participation rate higher to 62.9 percent.
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Even though an aging population should be pushing the participation
rate lower, it has been largely stable this year, suggesting more
workers are restarting job hunts that were put off when the job
market was more dire.
Just because individuals are seeking work does not mean they will
find it anytime soon. The number of people unemployed for more than
26 weeks actually increased slightly in July to 3.1 million.
Measured as a share of the workforce, the long-term unemployment
rate held steady at 2 percent, more than twice its levels in 2005
and 2006.
The Labor Department also said a broader measure of unemployment
increased slightly to 12.2 percent in July. This measure, known as
the U-6 jobless rate, includes workers who would like a job but are
not actively seeking one. The ranks of these workers increased in
July, another example of ongoing slack in the labor market.
(Reporting by Jason Lange in Washington; additional reporting by
Richard Leong and Jennifer Ablan in New York; Editing by Steve
Orlofsky)
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