Subject: David Hale Global Economics: How Weak Job Creation and Wage Growth Constrained This Recovery
From: "David Hale" <[email-masked]>
To: "R. Hunter Biden" <[email-masked]>
Date: Fri, 1 Aug 2014 11:45:07 -0700 (PDT)

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Dear R. Hunter,

Today's employment report for July marked the sixth month in a row where 
more than 200,000 jobs were created, which has not happened since 1997. 
Additionally, the average hourly wage of production and non-supervisory 
workers grew by a strong $0.04 during July. This jobs report continues 
the trend of a turnaround in job quality that has been present since the 
start of the year. The July employment report strengthens our view that 
the US economy's growth rate should be around 3% during the coming 
quarters.

Our research director, Mark Zoff, has written the attached report, "How 
Weak Job Creation and Wage Growth Constrained This Recovery", which 
analyzes the poor quality of job creation during most of this recovery 
and how this development has contributed to poor wage and output growth. 
In many ways this is a companion piece to his recent report on the 
structural evolution of the US labor force during recent decades that 
has led to weaker consumption in the post-Global Financial Crisis 
period, which is also attached to this email. This new report also 
examines a multitude of factors that have been hypothesized for causing 
weak wage and output growth during this recovery, and draws some 
counterintuitive conclusions. Key conclusions to the report include:

Lower-paying jobs have grown at a much faster rate than middle class 
jobs during this recovery and in comparison to the two previous 
recoveries

There are signs that the quality of new jobs created turned the corner 
during the six months through June, which will be positive for wage 
growth if this trend persists

In stark contrast to the previous two cycles, the hourly wage of private 
jobs created declined during this recovery until recently

Wage growth has arguably been more important in driving GDP growth than 
driving inflation growth during the last two decades

The quality of new jobs created will be important in determining wage 
growth, output growth, and the future level of interest rates going 
forward

As always, we welcome any questions or comments.

With all best wishes,

David Hale 

Chairman

David Hale Global Economics, Inc.

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