Dive Brief:

• The Labor Department reports that employee compensation — wages, salaries and benefits — increased 0.2% in the second quarter of 2015. The employment cost index increased 0.7% in the first quarter, and economists expected about the same pace of growth for the second quarter. 
• The annual rate of compensation inflation was 2% in the second quarter, compared to 2.6% for the first quarter. Compensation for private-sector employees was unchanged in the quarter; compensation for government workers rose 0.6%.
• These labor-cost measures are part of an ongoing debate as to whether the job market has largely returned to health after the Great Recession or if it is still weak, leaving behind millions of people who want to work or earn a better income, according to an article at Marketplace.org.

Dive Insight:

Economist Ozlem Yaylaci at IHS Global Insight told Marketplace that the weak second quarter ECI report contradicts evidence of an employment market that has mostly returned to health.

“It’s a big shock,” says Yaylaci, “because we see employment numbers very solid month to month, and the unemployment rate has been declining. We are now close to full employment.” The unemployment rate fell to 5.3 percent in June.

Labor economist Jesse Rothstein at University of California, Berkeley told Marketokace that in such a positive labor-market scenario, it would be easier for people to find jobs and harder for employers to attract and hire qualified workers. He says employers could be expected to lower their requirements for job applicants and to offer new hires more training, rather than expecting them to have job-specific skills and capabilities when they apply.

“We’d also be looking for evidence that wages are increasing as employers need to pay more to attract workers to jobs,” Rothstein says. “We’re not seeing evidence of any of these, which suggests that we really are still in a situation with a lot of slack in the labor market.”