'Hugely important,' says hshierholz: 'Decelerating wage growth means the Fed doesn’t need more interest rate increases to contain inflation.'
Today's new jobs report in the U.S. shows we added 372,000 jobs in June, bringing the three-month average to 375,000. This is down from the blistering average pace of 561,000 per month for the 12 months ending in February of this year. Job growth remains very strong, but is clearly moderating.
Make no mistake, we want positive real wage growth for workers. But—and this is hugely important—this decelerating wage growth means the Fed doesn’t need more interest rate increases to contain inflation. One big concern in the jobs numbers: There is still a giant gap in state and local govt jobs—they are down 656,000 since Feb ‘20, with close to half of that—306,000 jobs—in education. It’s crucial that state and local governments use their ARPA funds to raise pay and refill those jobs.
Though note, we aren’t at “mission accomplished” in the private sector either. Depending on how you measure the counterfactual, the total gap in the labor market right now is around 3 million jobs, with around 2 million of that in the private sector.
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