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Illustration: Aïda Amer/Axios

The job market is defying expectations, but there's a glaring flaw, Axios' Courtenay Brown writes.

Why it matters: With weak productivity and the fading tax cut stimulus, the labor market is the standout to keep the economic boom going. It's largely done the job so far — unemployment is near a half-century low and the economy has added 285,000 jobs on average over the last 5 months. But wage growth throughout the second longest economic expansion isn't yet measuring up to what we've seen in the past.

The continuation of that theme could be a drag on growth because it would represent a missed opportunity to pull more people into the labor force, James Wilcox, an economics professor at U.C. Berkeley's Haas School of Business, tells Axios.

  • "People get encouraged to work more when you pay them more," he said.

Be smart: The tight labor market is starting to deliver fatter paychecks, but wage growth has pulled back from its acceleration late last year and remains below pre-crisis levels.

  • This is odd, considering the record number of job openings that clearly reflect demand and hunger for workers.
  • At the White House this week, CEOs of major companies including Apple and Home Depot said they were finding increasingly scarce applicants for open jobs.

What's happening: So-called prime-age workers are hopping back into the labor force at the highest rate since 2009 (as reported in Axios PM), but not as fast as they were in the late 1990s.

  • A pick-up in wages should bring more people into the workforce — which could sustain the stellar job gains — but current wage growth might not be strong enough to pull others off the sidelines.
  • "If we have absorbed the whole shadow labor force, then we'll start to see wages going up," CUNA Mutual Group's chief economist Steve Rick tells Axios.

The bottom line: A lot is hinging on significant gains in the participation rate.

  • More people entering the workforce "improves the supply potential [of the labor force], ...and it helps contain income inequality at a time when those on the lower echelons of the income distribution scale have already and persistently fallen well behind," Mohamed El-Erian, chief economic adviser at Allianz, wrote in a Bloomberg op-ed.

And there are questions about how many more would-be workers are out there. "It will tap out probably by this summer," CUNA Mutual Group's Rick said. "We will be reaching the limit of how many people are still on the sidelines waiting to jump in."

Go deeper: America's wage crisis no longer looks temporary

Go deeper

CDC lets child migrant shelters fill to 100% despite COVID concern

Intensive care tents at overflow shelter in Carrizo Springs, Texas. Photo: Sergio Flores/The Washington Post via Getty Images

The Centers for Disease Control is allowing shelters handling child migrants who cross the U.S.-Mexico border to expand to full capacity, abandoning a requirement that they stay near 50% to inhibit the spread of the coronavirus, Axios has learned.

Why it matters: The fact that the country's premier health advisory agency is permitting a change in COVID-19 protocols indicates the scale of the immigration crisis. A draft memo obtained by Axios conceded "facilities should plan for and expect to have COVID-19 cases."

8 Senate Democrats vote against adding $15 minimum wage to COVID relief

Photo: Stefani Reynolds/Bloomberg via Getty Images

Eight Democratic senators on Friday voted against Sen. Bernie Sanders' amendment to ignore a ruling by the Senate parliamentarian and add a $15 minimum wage provision to the $1.9 trillion COVID relief package.

The state of play: The vote was held open for hours on Friday afternoon — even after every senator had voted — due to a standoff in negotiations over the next amendments that the Senate will take up.

CDC: Easing mask mandates led to higher COVID cases and deaths

Customer at a supermarket chain in Austin, Texas. Montinique Monroe/Getty Images

Easing mask restrictions and on-site dining have increased COVID-19 cases and deaths, according to a study out Friday from the Centers for Disease Control and Prevention.

Why it matters: The report's findings converge with actions from governors this week easing mask mandates and announcing plans to reopen nonessential businesses like restaurants.