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Expand chart
Data: Bureau of Labor Statistics; Chart: Axios Visuals

The hottest months on record have been the backdrop for what, on the surface, has seemed to be an equally red-hot U.S. labor market, with the lowest joblessness in a half century, rising wages, and bettering prospects for the least advantaged people.

Quick take: But, at odds with classic textbook lessons, experts now cite evidence that the economy may actually only be warm, with millions of people still wishing to get hired, to turn part-time or gig work into full-time employment, and to earn more money.

What's happening: In its latest report, the U.S. Bureau of Labor Statistics said the economy produced a great surplus of work above and beyond the number required to absorb new job entrants. Just 80,000-100,000 jobs are needed to soak up fresh graduates and other new entrants to the work force each month, and the economy produced 164,000 in July.

  • That left the July jobless rate at 3.7%, the lowest since 1969. Wages rose by 3.2%, double the 1.6% inflation rate.
  • Moreover, unemployment for black men remained at a record low of 5.8% and for black teens at 17.7%.

All kosher, right? Not if one is guided by history:

  • If you smooth out for monthly gyrations and take a 3-month average, the number of jobs increased by 140,000, well below the 211,000 during the same months in 2018, and the least in two years.

And wages are not rising as they should if you believe in the law of supply and demand, along with historical trends, which say they should be increasing at a fast clip since employers should be robustly competing to grab workers.

  • Instead, the year-over-year real average annual wage increase of 1.6% is far below the rates of 4% and more marked month after month just prior to the Great Recession.
  • Nominally, writes Dean Baker, senior economist at the Center for Economic and Policy Research, manufacturing wages rose an average of 2.5% over the year. But when you factor in lower weekly hours, the increase was just 1%, below inflation.

What economists now suspect: We are not in a tight jobs market.

In a recent piece, the WSJ's David Harrison cites work by David Bell, an economist at the University of Stirling, and Dartmouth's David Blanchflower, who blame the sluggish wages on an outgrowth of people working part-time.

  • This critical mass of people who actually want full-time work has created an in-built flaccidity in the job market, and been "the main influence on wages in the years since the Great Recession," Bell and Blanchflower write in a 2018 paper.

Thought bubble from Axios markets reporter Courtenay Brown: "There's sort of this chicken-or-egg dynamic here. Wages aren't growing because workers aren't coming off the sidelines, so there's not enough competition for talent for companies to raise pay. Meanwhile, workers may not be coming off the sidelines because wages aren't spectacular enough to make them jump back in."

Go deeper

Updated 2 hours ago - Politics & Policy

Pelosi appoints GOP Rep. Kinzinger to Jan. 6 committee

House Speaker Nancy Pelosi (D-Calif.) announced Sunday that she has appointed Rep. Adam Kinzinger (R-Ill.) to serve on the House select committee investigating the Jan 6. Capitol riot.

Why it matters: Pelosi's announcement comes after she rejected two of the five Republican appointments offered by House Minority Leader Kevin McCarthy (R-Calif.).

USCP chief: Officers testifying before Jan. 6 committee "need to be heard"

Thomas Manger, the new chief of the U.S. Capitol Police, Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

New Capitol Police chief Tom Manger said officers testifying before the Jan. 6 select committee this week "need to be heard."

Driving the news: The select committee's first hearing is set to take place on Tuesday and will feature testimony from law enforcement officers who were subject to some of the worst of violence during the insurrection.

Mike Allen, author of AM
4 hours ago - Politics & Policy

America's "Friendscape" crisis

New research shows Americans have fewer friends than in the past, and are less likely to have a best friend.

  • Why it matters: At a time of excruciating mental and societal stress, this is another sign we're breaking apart. And the friendship drought could get worse with more people working remotely or hybrid-ly.