The June jobs report gave a decent picture on jobs growth, even if there were somewhat fewer jobs than most analysts had predicted. At 57,000, the economy is generating enough jobs to keep pace with the growth of the labor force. However, there were other aspects to the report that were somewhat concerning, most notably the weak wage growth. Here are my big five takeaways from the report. 

1. Wage growth is slowing and not keeping pace with inflation;
2. There is virtually no job growth outside of the health care and social assistance sectors; 
3. Women are getting most of the new jobs;
4. Prime age (ages 25-54) employment-to-population ratios seems to have fallen a lot;
5. There is zero evidence of an AI-driven productivity boom.

I’ll take these in turn. 

Wage Growth Has Slowed Substantially from Its 2023-24 Pace

The average hourly wage increased 3.5% over the year from June 2025 to June 2026. This compares to a rate of over 4.0% in 2023 and 2024. This sort of slowing is striking given that the unemployment rate remains quite low by historical standards. 

It’s also striking to see that wage growth has not accelerated at all in the wake of the recent jump in inflation. That is good news from the standpoint of those worried about a 1970s-type wage-price spiral, but it is bad news for those concerned that workers’ pay is not keeping pace with prices. With year-over-year inflation over 4.0% in the most recent data, wages are clearly falling behind. The sharp drop in gas prices over the last month will help, but even incorporating this decline, workers are at best just treading water.

One of the good stories of the Biden years was that the lowest-paid workers had the largest increase in wages. There is little evidence that this is currently the case. The average hourly wage for production and non-supervisory workers, a group that excludes most higher-paid workers, has risen just 3.4% over the last year. 

However, in the low-paid restaurant sector, wages for production workers have risen 4.6% over the last year. It is possible that this increased wage growth could be in part attributable to a worker shortage resulting from large-scale deportations, but we will need more evidence on this issue. 

Health Care and Social Assistance are Providing Almost all the New Jobs

Over the last year, the economy added 506,000 jobs. The health care and social assistance sectors added 629,000 jobs. Even pulling out the federal government, which lost 258,000 jobs, health care and social assistance still accounted for more than 82% of the job growth over the last year. 

Every other sector shows very limited job growth. Local government employment is up 90,000, year-over-year, an average of 7,500 a month. State government lost 47,000 jobs, offsetting more than half of this growth. Professional and technical services added 62,000 jobs, an average of 5,000 a month. Retail added just 24,000 jobs.

The goods sector is not showing much growth. Construction added 64,000 jobs, also a bit more than 5,000 a month. Manufacturing lost 38,000 jobs over the last year, although employment has inched up in the last four months. Any hopes for a boom in the oil sector collapsed with the June price drop. Employment in oil and gas (including support activities) is down 7,100, year over year, while coal mining jobs are down by 700.

Restaurants are the only other sector showing strong job growth, with employment up 128,000, about 1.0%, over the last year. That increase is hard to understand since real sales are actually down 0.5% over the last year. 

Anyhow, there is very little job growth outside of the health care and social assistance sectors. The strong growth in this sector is not surprising, given the aging of the baby boomers, but it is striking there is so little growth anywhere else.

Women Are Getting Most of the New Jobs

Women’s share of payroll employment hit 50.1% in June, the highest ever. This is directly connected to the fact that most of the new jobs have been in health care and social assistance. Women account for 76.6% of the workers in this sector. As long as job growth in this sector outpaces job growth in the rest of the economy, women’s share of total employment will increase.

Prime Age EPOPs Fell, Especially for Men

There was an extraordinary one-month drop in the EPOPs for prime-age workers. The overall EPOP for prime-age workers fell 0.6PP to 80.2%, the lowest since December 2022. The EPOP for prime-age men (ages 25-54) dropped 0.9 percentage points to 85.7%, the lowest level since June of 2022. This sort of one-month drop is extraordinary. The monthly data are erratic, but a reported decline of this size almost certainly reflects something real in the labor market. There was also a smaller 0.3PP drop in the EPOP for prime age women to 74.9%. 

It is likely that noise accounted for much of this drop, but part is likely real. That is a bit hard to understand, given other data in the report that was reasonably positive. Look for this decline to be partly reversed in future months, but any drop is cause for concern. It also is worth noting the contrast to last year, when disadvantaged groups like young and Black workers were being hard hit, while prime-age workers and white workers were largely unaffected. The June data seem to reverse this picture.

The AI Productivity Boom Is Still Invisible

The index of aggregate hours grew at a 1.3% rate in the quarter. With GDP growth likely coming in close to 2.0%, we are looking at productivity growth around 1.0%. That follows growth of 0.3% in the first quarter and 1.6% in the fourth quarter of 2025. There is zero evidence of any sort of productivity uptick in these data.

Perhaps we just need to wait a bit longer, but insofar as hopes for AI are driving the stock boom, we are way behind the curve. At the point where the stock market was hitting its peaks in 2000 (comparable to the current price-to-earnings ratio for the market as a whole), productivity growth had been averaging close to 2.8% for more than four years. We would need rates of productivity growth in the neighborhood of 4.0% to generate the sort of profits needed to make sense of current market levels. (The market crashed in 2000 for trivia buffs.)

It is surprising that the continuing weakness of productivity doesn’t bother stock investors more. It is as though they are completely clueless about the relationship between the stock market and the economy, which may be true.

Happy 250th Folks

I may have a thing or two to say over the weekend, but I will be mostly trying to enjoy the holiday and avoid the fireworks. (They terrify my dogs.)