The next big event that economists and markets are watching is Friday's nonfarm payrolls report. The majority of economists say the U.S. economy added 100,000 jobs in July and that the national unemployment rate remained steady at 8.2 percent.
Dean Baker, co-director of the Center for Economic and Policy Research, is a bit more optimistic and estimates that employers hired at least 160,000 new workers last month.
In order to keep up with population growth, employers need to add at least 100,000 jobs a month, says Baker. While 160,000 payrolls is not a spectacular figure, it would be higher than previous job reports.
Baker's forecast rests largely on the following two things:
1) Job growth is back on trend after an unseasonably warm winter. Due to an unseasonably warm winter, people were out shopping and spending more than usual, he notes, which led to unusually high jobs growth during that period. Warm weather was good for the winter months "but that in effect borrowed job growth from subsequent months," he says. "We are through that now so we should expect to be back on trend."
2) The sharp drop in weekly unemployment claims. The Labor Department's initial claims report on Thursday was better-than-expected. Americans filed 365,000 new jobless claims in the most recent week, up from 357,000 the previous week, but less than forecasted. The four-week moving average fell by 2,750 to 365,500 -- the lowest amount in the last four months.
Baker joins The Daily Ticker's Aaron Task in the accompanying interview to discuss what more can be done to stimulate the economy. He believes the Federal Reserve could and should be doing more and also says raising the country's minimum wage from $7.25 an hour to almost $10 an hour would go a long way in stimulating consumer demand and jobs growth.
A full-time worker earning the current minimum wage of $7.25 makes an annual salary of roughly $15,000 a year. "This is less than half of what the average Fortune 500 CEO makes in a day," Baker writes in a recent blog post.
A counter argument to raising the minimum wage is that employers would be less likely to hire new employees, hurting job growth. But Baker believes there is no substantial evidence to support this and says a 20 percent increase in the hourly rate might only lead to a 2 or 3 percent decline in hourly jobs.
In 2007, Congress voted to increase the minimum wage each year for three years, but the rate has not moved higher after hitting $7.25 an hour in 2009.
Baker notes that the minimum wage has not kept up with inflation. According to his estimates, the minimum wage in 1968 would be nearly $9 in today's dollars.
"A minimum wage of $10 an hour would be a big step in the right direction," Baker writes. That equates to an annual salary just over $20,000.
Nearly 10 million workers currently earn the federal minimum wage and 40 percent of them have children to support, according to Baker.
Congress is considering a bill to raise the minimum wage to $9.80 an hour over the next three years.
Tell us what you think! Should Congress raise the minimum wage?