On the July Jobs Report, and the Education Dividend

It looks like a miss, but it was a beat thanks to strong upward revisions for the prior two months. The labor force continued to expand, employing more than all new entrants. The probability of losing your job today is the lowest in history. And hourly earnings growth remains tepid, offering no reason for concern to the Fed. We think the labor force can keep growing even into the tenth year of this expansion, because large increases in educational attainment since 2000 create an underappreciated demographic dividend. Based on the decrease in those without a high school diploma, and the increase in those with college education, we estimate that the labor force could expand by more than 13 million.