The Economy Needs More Workers. Last Month, It Got Fewer.

The share of those 25 to 54 working, 79.3 percent in August, is the same as it was in February. A spike in that level in July wasn’t sustained last month.

Ultimately, if the economy is going to keep adding 200,000 jobs a month and grow at the kind of boom-time pace that was evident this past spring, it will need a growing work force to fill those jobs and make those goods and services. There’s not too much evidence that there are in fact hordes of younger people currently on the sidelines of the labor market who might soon be coaxed back in.

Which brings us to the wage numbers. It’s good news that average hourly earnings are up 2.9 percent over the last year, a sign that employers are having to boost pay to keep good employees (or pay more to poach them from competitors).

Wage gains would still need to accelerate further to get to the kinds of levels that are historically normal; in 2008, for example, the year the recession began, average hourly earnings rose 3.6 percent.

But the fact that higher pay raises are finally showing up in the data is another piece of evidence that employers are coming up against the limits of the labor force. Just maybe, after years of trying every recruitment technique other than raising hourly pay, employers are starting to turn more to that option.

In other words, the labor market could finally be so tight that employers just don’t have a choice if they want to attract and retain workers.

As always, it would be a mistake to read too much into a single month’s report, and both the good and bad news in the August numbers could vanish as soon as the September data is on the books.

But as the Federal Reserve tries to decide how much to raise interest rates this year and next, and as forecasters examine how much room to run this expansion has, it’s worth taking the August numbers as a sign for the economy as a whole: Help Wanted.

Article source: https://www.nytimes.com/2018/09/07/upshot/jobs-report-economy-needs-workers.html?partner=rss&emc=rss