The June jobs report brought with it almost universally good news, unless you're a worker looking for a substantially fatter paycheck.
Wage gains remain positive but muted, growing at 2.7 percent annually, or pretty much the same level as the previous three months and below Wall Street expectations. That's despite the supposed benefits of a tightening labor market, and a tax cut that was supposed to push average hourly earnings over the 3 percent barrier.
Job gains —213,000 in all for nonfarm payrolls — were spread across the board but the positions are paying only a bit more due to a variety of factors that are keeping gains just above inflation.
"You're creating jobs in good areas where you're creating careers — manufacturing, business services, health care construction, those are places you want to see the jobs created. But the conundrum of wages continues," said JJ Kinahan, chief market strategist at TD Ameritrade. "How are we not getting higher wages? A lot of that has to do with the fact that at lower end of the scale you're seeing people being replaced by machines. There are jobs, but there's a lot of lateral movement."
Indeed, there were 6.7 million job openings as of the most recent count and 6.6 million people who the Bureau of Labor Statistics considers unemployed.
That should be creating more substantial wage pressures. Yet the jobs market keeps showing each month that there's more slack than economists are figuring and thus more room for employers to keep pay increases modest.
In June specifically, the entrance of 601,000 workers either back into the labor force or entering for the first time helped overall job gains while keeping wages lower. The growth of the labor force participation rate accounted for an increase in the unemployment rate to 4 percent from 3.8 percent, a statistical change that actually showed more vibrant conditions.
"While the wage growth rate didn’t increase this month, having it hold steady is a good sign," said Cathy Barrera, chief economist at ZipRecruiter, an online employment marketplace. "The increased labor force participation could create slack in the labor market if there isn’t enough demand for those workers. In this case, wage growth may be dampened. That the rate did not decline further indicates that these workers are alleviating a shortage rather than creating slack."