The payroll report for June 2017 was the first “good” one in some time. There are now a few indications that the “reflation” in the economy may be finally having positive effects on the labor market. The headline Establishment Survey gain was relatively solid at 222k, though it was above 200k for just the fourth time in the last nine months. The 6-month average, however, is still just 180k, much closer to 2012 levels than 2014.

Maybe the best sign of delayed improvement was in average weekly hours. The estimate was revised higher for April to 34.5 per week, with hours in June matching that level. Those were the best figures since the beginning of 2016.

If there is actual improvement in labor utilization, it is proceeding at a painfully slow pace. At least in that way it is consistent with general economic conditions over the past few years. Whatever has occurred in either direction, other than the work requirements re-imposed via SNAP the US labor force has proved itself unflinchingly apathetic.

The unemployment rate suggests, strongly, that it should be otherwise. A high rate of utilization at least with regard to potential “slack” would be a significantly strong draw of people back into the labor force. Yet, going back to the start of 2015 when the unemployment rate dropped to what the FOMC at the time considered “full employment”, just 3.1 million Americans have entered the labor force. Of those, 2.5 million did so all in the six months where many state governments resumed work requirements for food aid. Of the other 24 months, only 654k have participated.

Since the unemployment rate fell below 5% in May last year, the Civilian Non-institutional Population has grown by just less than 2 million. The labor force expanded by only 1.2 million, projecting only a 60% participation rate during that time, slightly less than the overall Civilian Labor Force Participation rate (62.8%) but really and unfortunately consistent with it. In other words, even though the unemployment rate has dropped below every definition of full employment, the participation problem remains as ever unmoved.