Payrolls surged and wages climbed, both positives for President Biden and the Federal Reserve. But stagnant labor market participation highlights a key risk.

By Jeanna Smialek and Jim Tankersley

Employers are hiring and wages are rising but the number of people actively working or looking for jobs remains stagnant, a phenomenon that is making it difficult for the Federal Reserve and White House to determine how much the labor market has recovered and how long the U.S. economy will continue to need hefty support.

Employers added 850,000 workers to payrolls in June, a strong number that was buttressed by rising wages as employers scramble to hire to meet surging customer demand. The report gives the Biden administration encouraging talking points, and the Fed a sign that the economy is making progress toward the central bank’s full employment goal.

But the fact that workers aren’t rushing back to the job market injects a note of caution into an otherwise sunny outlook. The labor force participation rate, a measure of people working or looking for jobs, has barely budged in recent months and was unchanged at 61.6 percent in June. It remains sharply down from 63.3 percent before the crisis started.

The labor force participation rate did not budge.

Share of the working-age population who are in the labor force (employed, unemployed but looking for work or on temporary layoff)

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