July job growth merely keeps pace with population growth at 157,000

This is really not a jobs report for anyone to get excited about, regardless of which side you come down on in the never-ending battle to gain partisan advantage from everything. Adding 157,000 jobs in a month just about keeps you even with population growth, which means that if you added that number every month forever, not much would really change in terms of the employment picture. And with the U-3 unemployment rate at a crazy low 3.9 percent, it hardly seems like a major crisis that we didn’t add jobs at a breakneck pace in July.

The problem is that the labor force participation rate is still low, and we need to add more jobs to get those who have dropped out of the workforce to come back in. We’ve been on a good pace in recent months and we may continue it in the months to come, so July could turn out to be a 1-2-3 inning in a game in which you’re otherwise scoring runs left and right. But at least for this one month, the job growth wasn’t there. Note the passage in bold:

Nonfarm payrolls increased by 157,000 jobs last month, the Labor Department said on Friday. The economy created 59,000 more jobs in May and June than previously reported and needs to generate about 120,000 jobs per month to keep up with growth in the working-age population. The unemployment rate fell one-tenth of a percentage point to 3.9 percent in July, even as more people entered the labor force in a sign of confidence in their job prospects. The low unemployment rate could allow the Federal Reserve to raise interest rates again in September. The jobless rate had risen in June from an 18-year low of 3.8 percent in May. Economists polled by Reuters had forecast nonfarm payrolls increasing by 190,000 jobs last month and the unemployment rate falling to 3.9 percent. The slowdown in hiring last month likely is not the result of trade tensions, which have escalated in recent days, but rather because of a shortage of workers. There are about 6.6 million unfilled jobs in the nation. A survey of small businesses published on Thursday showed a record number in July of establishments reporting that they could not find workers. According to the NFIB, the vacancies were concentrated in construction, manufacturing and wholesale trade industries. Small businesses said they were also struggling to fill positions that did not require skilled labor.

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You can’t expect businesses to create jobs if they can’t fill the ones they were previously trying to create. But the state of the labor force threatens long-term growth in the sense that growth is a measure of productivity. You have all the demand in the world for goods, but if your workforce can’t produce the goods being demanded, the demand will go unfilled and growth will slow down. This is one of the lingering effects of Obama policies like ObamaCare and the expansion of Food Stamps, which served for many people as disincentives to work. In today’s Wall Street Journal, a former Obama economic adviser argues against work requirements for welfare on the theory that it’s unfair to expect many people to work even 20 hours a week. But those people who remain outside the workforce are making it harder for the job numbers to growth much more, and eventually that will cause a slowdown if it’s not addressed. There’s plenty of wealth to be used right now to create jobs. There is work that needs to be done. And there are people not doing anything who could show up and take those jobs. If we can find a way to make that happen in large numbers, that 4.1 percent growth we saw last quarter could look like the stuff of paupers. But right now it’s one of the biggest things standing in the way of sustained, long-term, robust growth. Hopefully what we saw in July isn’t the start of a trend, but it’s a reason to see the state of the workforce as an urgent priority.