By many measures, the June jobs report was a pretty good one. The US economy added a better-than-expected 220,000 net new jobs. And job growth for April and May was upgraded by 47,000. Sure, the jobless rate ticked up 0.1 to 4.4%. But that’s OK, because “a massive 361,000 increase in the labour force more than offset an otherwise solid 245,000 gain in the household survey measure of employment,” according to Capital Economics. Both the employment rate and the labor force participation rate edged higher.

But wage growth was less impressive than the job gains. I know, we’ve heard this story before. JPMorgan economist Michael Feroli:

Average hourly earnings were, once again, the soft spot in the report. The 0.2% June increase was on the light side of expectations, and the May increase was revised down a tick to only a 0.1% gain. After accelerating to 2.9% late last year, wage gains on a year-ago basis have slowed to 2.5% in June. After accelerating to 2.9% late last year, wage gains on a year-ago basis have slowed to 2.5% in June … Turning to wages, the production and nonsupervisory worker measure of average hourly earnings didn’t look any better than the headline figure: increasing 0.2% last month and only 2.3% on a year-ago basis. There is no shortage of explanation as to why wage growth remains tepid – shadow slack, reduced bargaining power due to globalization, de-unionization, automation, etc. – but what is puzzling is that wage growth, at least according to the average hourly earnings measure, was clearly accelerating in 2015 and 2016. Why it would slow only in the last two quarters is a mystery. The ECI (arguably the Fed’s preferred inflation gauge) has not displayed this pattern, and the Q2 release later this month will be closely watched.

So maybe there is still considerable slack in the labor market, and wages will rise faster as this dries up. After all, the economy continues to generate a considerable number of jobs on a regular basis. Over the past three months, job gains have averaged 194,000 per month. IHS Markit offers a version of this theory:

[We continue] to predict that over the coming months payroll employment growth will average between 150,000 and 180,000. As the remaining slack in the labor market (between 1.5 million and 2 million workers) continues to diminish over the next year, the pace of wage growth will pick up.

Or perhaps weak wage growth stems from weak productivity growth. John Silvia of Wells Fargo:

Despite continued steady job growth in 2017, earnings have yet to break out of this mid-two percent pace. The softer inflation readings and weak productivity numbers have limited the gains in nominal wage growth. On balance, average hourly and weekly earnings continue to improve and, along with more jobs, support the case for household income gains. Over the longer run, wages reflect the economic fundamentals of the labor market, and those fundamentals include productivity and inflation. During the current cycle, analysts have repeatedly commented on low productivity, while inflation has been persistently below the FOMC’s target of two percent. With both productivity growth and inflation continuing to prove sluggish, it is not altogether surprising that wage growth has disappointed given the performance of the fundamentals.

And this from Politico reporter Danny Vinik in May:

Under this theory, wage growth is rising as expected under economic theory — but a lack of productivity growth is holding the entire economy back. Traditional economic theory holds that workers’ wages will rise in line with productivity growth — as they become more productive, workers become more valuable to companies and can demand a raise. If the company refuses to raise wages, workers will switch employers to someone who does adequately value their services. There’s one big assumption at the heart of this theory: The economy is at full employment. Without a tight labor market, employees won’t have the bargaining power to demand a fair wage. So proponents of this theory, like Jason Furman, a former chairman of Obama’s Council of Economic Advisers, generally believe that the economy is at full employment. “Unfortunately, the more plausible explanation [for weak wage growth] is that productivity growth is running around 0.5% annually so we only should have real wage growth of about that,” he wrote in an email.

Boosting productivity growth should be the top priority of policymakers in advanced economies, including America.