MI Responds: August 2017 Jobs Report
The jobs report issued by the Labor Department today is disappointing. In August the economy created a net 156,000 jobs (165,000 added in the private sector and a loss of 9,000 in the public sector), below forecasters’ expectations. Plus, the prior two months’ rosy estimates were revised down by 41,000. The unemployment rate inched up to 4.4 percent. Some months the unemployment rate rises when the labor force participation rate rises, as more people move into the labor force. Not this time: that rate remained the same at 62.9 percent.
One explanation for the slow pace of wage growth—up one-tenth of a percent from July, and up 2.5 percent from a year ago—is the composition of the employed. In August unemployment rates for those with less than a high school diploma declined by almost a full percentage point, while rates for those with more education stayed the same or rose. If the economy is adding more low-skill jobs, then average wages are not going to rise.
As Congress returns the focus will be on tax reform. If there is one single thing that can speed up growth and job creation, it is tax reform. We should hope that Congress and the President achieve fundamental tax reform with lower rates.
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