The job market is strong, but wage growth still lags

The U.S. economy added 156,000 jobs in August, while the unemployment rate ticked up slightly to 4.4% — missing economists' expectations. Taken in context, companies still can't find enough workers to fill their open slots, but this hasn't translated into faster wage growth, as average hourly earnings were up just 2.5% year-over-year — little more than the rate of inflation. Economists had expected 180,000 new jobs and an unemployment rate of 4.3%.

Turmoil in the "information" sector: Here we look at the information sector, which shed 8,000 jobs in August. Jed Kolko, chief economist at Indeed, emails Axios to say that the sector "includes tech, so people typically assume that it's booming. But several job-losing industries are in the information sector as well, like broadcasting, motion pictures production, and telecommunications."

Data: Bureau of Labor Statistics; Graphic: Chris Canipe / Axios

Why it matters: The labor market is stronger today than in at least a decade. But without accelerating wage growth, many Americans will continue to see themselves as stuck in neutral, financially speaking. This trend is illustrated by measures of consumer confidence, in which Americans say they are far less pleased with the economy than during previous periods of low joblessness, and right-track/wrong-track polling shows that more than half of Americans are down on the state of the nation.

Why wage growth isn't accelerating: The law of supply and demand says that as the unemployment rate falls, employers should be forced to raise wages to compete for workers. But Kolko cites three reasons why we're not seeing this happen just yet:

1. Productivity growth remains stuck: Workers justify wage hikes by becoming more productive, i.e. getting more stuff done per hour, but productivity has been growing at a snail's pace of late.
2. Boomers retiring: We're amidst a great turnover in the job market, wherein high-earning baby boomers are retiring, but being replaced by cheaper millennials.
3. The unemployment rate overstates the case: Other measures of the labor market, like the ratio of workers to overall working-age population, remain depressed. This suggests that there are still many workers, who are considered "out of the labor market" rather than "unemployed" because of the idiosyncrasies of the Labor Department's official unemployment measure.