This morning’s employment situation report showed the economy added 223,000 jobs in May—above consensus predictions and enough to continue the economy’s steady march towards full employment. The report also shows that the unemployment rate fell to 3.8 percent. In April, the unemployment rate dropped below 4.0 percent for the first time since 2000, but for the “wrong” reasons—because people left the labor force, not because they found work. Meanwhile, in May, more people found jobs at the same time that the labor force participation rate ticked down slightly. About two-thirds of the drop in the unemployment rate in May was because workers found jobs, while about one-third of the drop was from people leaving the labor force.

Wages, meanwhile, grew 2.7 percent over the past year. Year-over-year nominal wage growth has been remarkably flat since the end of 2015—hovering around 2.6 percent and never getting above 2.8 percent. In a full employment economy, we would see wages rising much faster—closer to 3.5 percent and above—to claw back the losses to labor share in the aftermath of the Great Recession. While economists and commentators have myriad explanations for why wage growth is so sluggish, it seems obvious that, with many workers still unemployed or sitting on the sidelines, employers just don’t have any incentive to raise wages.