Jared Bernstein: "Jobs report comes in slightly weaker than expected, but the real problem is slow wage growth"

From Mr. Bernstein's On the Economy blog:

The nation’s payrolls climbed 156,000 last month and the unemployment rate ticked up slightly to 4.4 percent, in a slightly weaker-than-expected jobs report. Wage growth is still stuck at an annual growth rate of 2.5%, the length of the average work week ticked down slightly, and payroll gains for June and July were revised down 41,000. (Note: Hurricane Harvey’s impact is NOT present in today’s jobs numbers, as the storm struck well after the survey date. See comments below.)

Though the report on job growth in August comes in below expectations, the labor market continues to tighten at a good clip, generating job, wage, and income growth that will continue to support the expansion. However, there are soft spots, most notably the fact that wage growth has been uncharacteristically unresponsive to persistently low unemployment.

Smoothing out the statistical noise from the monthly data is a useful way to get a clearer signal as to the trend of employment growth. JB’s monthly smoother shows that over the past three months, monthly gains averaged 185,000, a slight acceleration over the longer-term trends, and a number that’s thoroughly consistent with continued improvement and tightening in the job market....

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And yet, hourly wages can’t catch a buzz. As the figures below show, for all private-sector workers, nominal wage growth was stuck at 2% throughout much of the recovery, before taking off about two years ago, climbing to 2.5%, where it has been stuck, if not decelerating a bit (as per the smoother, a 6-month rolling average). For lower-paid workers (bottom figure: the 80% of the workforce that’s blue-collar production workers and non-managers in services), the pattern is similar, though the recent deceleration looks a bit clearer....

....MUCH MORE