The Economy Needs More Workers. Last Month, the item Got Fewer.

The headlines for the August job numbers released in which morning are nothing however Great. Employers added a robust 201,000 jobs, the unemployment rate remained at the rock-bottom level of 3.9 percent, in addition to wages grew the fastest they have in nine years.

There’s no doubt in which in which can be the best economy in quite a long time for American workers, who by a wide range of measures can find a job more easily than they have in a decade.

however when you pull apart the details, you also find hints in which in which can be an economy running awfully close to its capacity. If in which’s the case — in addition to one month’s worth of numbers isn’t enough to make the case definitively — the item implies we should expect both slower growth in addition to steeper Federal Reserve interest rate increases inside next couple of years.

The economic output of the United States can be ultimately limited by the number of people who want to work, the capabilities of the machines in addition to various other types of capital they can work with, in addition to the skill of managers at putting those workers in addition to machines to the best possible use.

The brand-new employment numbers don’t tell us anything about the second two dimensions of economic potential, however give us some brand-new information about the first, in addition to the item isn’t Great.

The labor force participation rate — the share of the adult population either working or looking for a job­ — fell by 0.2 percentage points to 62.7 percent. The share of the population working also fell by 0.2 percentage points.

the item’s hard to discern any positive long-term trend inside share of the adult population in which can be looking to be part of the work force. In mid-2008, more than 66 percent of adults were inside labor force, which fell to 62.7 percent in early 2015.

the item has bounced around inside three in addition to a half years since, however ended up at the exact same level. There can be no obvious positive trend.

A big part of in which can be demographic change, as the baby boom generation hits retirement age. The numbers are better if you narrow your focus to people in their prime working years, between ages 25 in addition to 54. however there, too, there can be reason to think in which progress in putting more people to work has been nonexistent in which year.

The share of those 25 to 54 working, 79.3 percent in August, can be the same as the item was in February. A spike in in which level in July wasn’t sustained last month.

Ultimately, if the economy can be going to keep adding 0,000 jobs a month in addition to grow at the kind of boom-time pace in which was evident in which past spring, the item will need a growing work force to fill those jobs in addition to make those goods in addition to services. There’s not too much evidence in which there are in fact hordes of younger people currently on the sidelines of the labor market who might soon be coaxed back in.

Which brings us to the wage numbers. the item’s Great news in which average hourly earnings are up 2.9 percent over the last year, a sign in which employers are having to boost pay to keep Great employees (or pay more to poach them through competitors).

Wage gains could still need to accelerate further to get to the kinds of levels in which are historically normal; in 2008, for example, the year the recession began, average hourly earnings rose 3.6 percent.

however the fact in which higher pay raises are finally showing up inside data can be another piece of evidence in which employers are coming up against the limits of the labor force. Just maybe, after years of trying every recruitment technique various other than raising hourly pay, employers are starting to turn more to in which option.

In various other words, the labor market could finally be so tight in which employers just don’t have a choice if they want to attract in addition to retain workers.

As always, the item could be a mistake to read too much into an individual month’s report, in addition to both the Great in addition to bad news inside August numbers could vanish as soon as the September data can be on the books.

however as the Federal Reserve tries to decide how much to raise interest rates in which year in addition to next, in addition to as forecasters examine how much room to run in which expansion has, the item’s worth taking the August numbers as a sign for the economy as a whole: Help Wanted.