The U.S. economy churned out 215,000 new jobs in July and the nation’s unemployment rate remained at 5.3%, the Department of Labor reported on August 7.

These job gains continue the economy’s 200,000-plus monthly pace that has produced some 2.7 million new jobs in the past 12 months, an average monthly gain of 246,000.

The 5.3% unemployment rate is about as close to “full” employment as it gets and represents the lowest jobless rate in over seven years.  

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Jobs Report: Glass Half Full?

Fri Aug 7, 2015

The U.S. economy churned out 215,000 new jobs in July and the nation’s unemployment rate remained at 5.3%, the Department of Labor reported on August 7.

These job gains continue the economy’s 200,000-plus monthly pace that has produced some 2.7 million new jobs in the past 12 months, an average monthly gain of 246,000.

The 5.3% unemployment rate is about as close to “full” employment as it gets and represents the lowest jobless rate in over seven years.

But the great news on jobs was not without a couple of weak spots.

For one, the labor force participation rate remained at an extraordinarily low 62.6%, the lowest reading in 38 years. This measures the percent of the working age population that is either employed or unemployed and actively looking for work. Put another way, over 90 million people over the age of 16 who are not on military active duty or residents of institutions are not in the labor force. The large cohort of retiring baby boomers accounts for only a part of this low participation rate.

For another, U.S. wage growth continues to be anemic. Average hourly earnings for private sector workers grew in July by only 0.2%, and over the year by only 2.1%, barely keeping up with inflation. This is in line with last week’s report that the Labor Department’s Employment Cost Index—a gauge of workers’ salaries and benefits—rose by only 0.2% in the second quarter, the smallest quarterly gain in 33 years.

What’s the bottom line? The economy has returned to full employment, welcome news indeed after the 10% unemployment crisis of 2009.  But contrary to precedent low unemployment has not magnetized workforce dropouts back to the job market. And full employment has yet to translate into faster wage growth.

Most economists believe the laws of supply and demand have not been repealed—just delayed. Eventually full employment will attract discouraged workers back into the labor force and wages will pick up speed

Americans are right to celebrate the return of full employment at last; but they’re also right that the champagne glass remains only half full.