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To download [How Weak Job Creation and Wage Growth Constrained This Recovery.pdf], click on the following link:
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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.

546 Lincoln Avenue, 2 nd Floor

Winnetka, Illinois 60093 USA

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