With help from Marianne LeVine and Timothy Noah

ECONOMY ADDS 215,000 JOBS: The economy added 215,000 jobs in July, the Labor Department reported Friday, while the unemployment rate held at 5.3 percent—numbers unlikely to dissuade the Federal Reserve from raising interest rates in September.

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The Fed signaled in June that it required “some further improvement” in the economy before raising its rock-bottom rates. Analysts had generally considered any job gains over the 200,000 mark to meet the Fed’s expectations. CNBC reported Fed funds futures to point to a 55 percent chance of a September hike, up from 47 percent before the jobs numbers were released.

“Trend job growth is rock solid,” Bloomberg quoted Moody’s senior economist Ryan Sweet saying. “It’s more than sufficient to continue to chip away at the slack that’s left in the job market.” But Elise Gouls, a senior economist at the left-leaning Economic Policy  Institute,noted that nominal average hourly earnings—“the arguably most important measure for the Fed”—was up only 2.1 percent over the year, “in line with the same slow growth we’ve seen” since the end of the Great Recession.

GOOD MORNING, it's Friday, August 7 and this is Morning Shift, POLITICO's daily tipsheet on labor and employment policy. Send tips, corrections and exclusives to bmahoney@politico.com, tnoah@politico.com, melk@politico.com, andmlevine@politico.com. Follow us on Twitter at @politicomahoney, @TimothyNoah1, @MikeElk, @marianne_levine.

ABERCROMBIE TO END ON-CALL SCHEDULING: “Under pressure from New York regulators, one big retailer is ending a controversial scheduling practice for workers,” The Wall Street Journal’s Lauren Weber reports.

“Abercrombie & Fitch Co. will cease using on-call scheduling — which requires workers to make themselves available for shifts that may be canceled at the last minute — at its New York stores by the end of 2015, according to a letter sent Thursday to the office of New York Attorney General Eric Schneiderman.” http://on.wsj.com/1KTS1vd

THE ANXIOUS ECONOMY: Even if today’s topline jobs numbers show strength in the economy, there’s much lingering apprehension in the workforce. Minnesota’s Faribault Wooden Mill shut down between 2009 and 2010 in the wake of the recession, only to reopen in a new age of anxiety. “While virtually all the laid-off workers have been brought back and 30 new positions have been filled this year, employees still sometimes find it difficult to shake off the trauma,” the New York Times’  Nelson Schwartz writes. “It doesn’t keep us awake at night, but we all think about it,” chief marketing officer Bruce Bildsten told the Times. “We’re growing slowly and steadily. But we’re prepared for the inevitable downturn.”

“The company’s trajectory parallels the course of the overall American recovery in the last six years. Growth has resumed and hiring has picked up, but a lingering unease remains, with workers in particular wondering how long the good times will last, and whether this is as good as it gets.” http://nyti.ms/1ItqDBg

NURSES UNION HOSTS BERNIE MONDAY: National Nurses United, the largest nurses’ union in the country, will host Sen. Bernie Sanders for brunch at union headquarters in Oakland on Monday. Will they discuss an endorsement? Morning Shift noted last week that NNU plans to issue a presidential endorsement before September, and that NNU Executive Director RoseAnn DeMoro seemed very taken with Bernie. “Let’s just be real. Bernie Sanders’ issues align with everybody in organized labor from top to bottom,” DeMoro said.

SANDERS KNOCKS CLINTON ON WELFARE REFORM: Sanders appeared by video before the Iowa AFL-CIO’s summer conference last night. But before he did so, he knocked Hillary Clinton’s support for her husband’s expansive welfare reform legislation. "We need to figure out why people are in poverty,” he told Bloomberg’s Josh Eidelson in a phone interview. “We need to get people out of poverty ... Instead of giving tax breaks to billionaires, we should make sure that every person in this country lives in dignity.” http://bloom.bg/1IoZTDT

TODAY: CHICAGO TEACHERS UNION V. RAUNER: The Chicago Teachers Union is at war with Illinois Gov. Bruce Rauner over his opposition to a proposal that would see $200 million in state funds shipped to Chicago for teachers’ pensions. Rauner calls the proposal a “special deal” and is signaling that Chicago Mayor Rahm Emanuel — unloved by CTU — is on board with his plans for a separate fix.

“Specifically, Rauner said that ‘city leaders’ have asked him to advance legislation that would require Chicago Public School teachers to begin paying an additional 7 percent of salary toward their pensions,” Crain’s Greg Hinz writes. “That ‘employee share’ has been paid by CPS under a decades-old deal with the Chicago Teachers Union and CTU doesn't want to give it up now.”

"Leaders in Chicago have already come to us and asked for state help to get the pension contribution discussion out of collective bargaining and make it required," Rauner said. "We included it at the city leaders' request in our draft (statewide) pension reform legislation." http://bit.ly/1KTsDFT

CTU President Karen Lewis will respond to Rauner’s proposal and update reporters on collective bargaining negotiations this morning at 11:30 CDT.

LAWMAKERS QUESTION MALAYSIA UPGRADE: Representatives Keith Ellison (D-Minn.), Rosa DeLauro (D-Conn.) and Mark Pocan (D-Wisc.) are concerned about Malaysia’s recent upgrade from a Tier III country to the Tier II Watch List in the State Department’s  annual report on human trafficking conditions. In a letter sent to President Barack Obama and Secretary of State John Kerry, the lawmakers request clarification regarding what “significant efforts” Malaysia made to earn its upgrade. In addition, the lawmakers ask for an explanation for the discrepancies between the State Department report and a 2014 Labor Department report that found new instances of child labor and forced labor in Malaysia. They also ask for clarification for when the State Department reporting period actually occurred.

The letter follows a recent Reuters investigation that found the State Department overruled recommendations from its own human rights experts in granting Malaysia Tier 2 status. The upgrade angered labor groups, who saw the move as a political decision linked to ongoing trade negotiations. Under the terms for giving President Barack Obama fast-track authority, the United States may not negotiate with Tier 3 countries.

UFC FIGHTERS NEXT TO UNIONIZE?: Teamsters and UNITE Here are tag-teaming to unionize mixed-martial arts fighters in the Ultimate Fighting Championships. In a joint statement Thursday, Chris Griswold, Secretary-Treasurer of Teamsters Local 986 said the unions were “surprised to learn how poorly these professional fighters are treated in the UFC” and wanted “to help them improve conditions for themselves and raise standards for the sport.” The UFC is pushing for New York to legalize mixed -martial arts but says unions are standing in the way. http://yhoo.it/1gNO3us

WAL-MART RAISES ‘PITTING PEOPLE AGAINST EACH OTHER’: Not all Wal-Mart employees were happy when the company announced earlier this year that it would raise its starting wage to $9 an hour in April and to at least $10 an hour in February 2016. According to interviews and Facebook comments, senior employees are wondering why they didn’t get a pay hike.

“It is pitting people against each other,” Charmaine Givens-Thomas, a 10-year Wal-Mart veteran, told Bloomberg’s Shannon Pettypiece. “It hurts morale when people feel like they aren’t being appreciated. I hear people every day talking about looking for other jobs and wanting to remove themselves from Wal-Mart and a job that will make them feel like that.”

Sound familiar?  Last week, the New York Times reported that Dan Price, CEO of  a Seattle credit processing firm, faced employee backlash for raising his company’s minimum salary to $70,000. Two employees quit, saying it was unfair that new hires were seeing their pay doubled, while more senior members did not get a pay raise. “Now the people who were just clocking in and out were making the same as me,” Gravity web developer Grant Moran complained. “It shackles high performers to less motivated team members.” http://bloom.bg/1IZaI3c

ON DEMAND COMPANIES ADOPTING W-2s: More “on-demand” tech companies are choosing to classify their app-toting workforce as employees, not independent contractors. The latest company to make the change is Sprig, an on-demand meal company. “Grocery delivery company Instacart paved the way in June, followed soon after by mail-sending service Shyp," writes re/code’s Carmel DeAmicis. The valet app Luxe also made the move, according to the report. 

"Meanwhile, ride-hailing services Uber and Lyft are fighting costly lawsuits over the way they classify their drivers. Since their drivers are contractors instead of employees, Uber and Lyft don’t have to pay their expenses, give them vacation or health benefits or pay into Social Security or taxes for them. If they lose the class-action lawsuits against them, they could be liable for millions more in costs every year.” http://on.recode.net/1ILudG5

COFFEE BREAK

— Democrats woo labor in Iowa, from U.S. News: http://bit.ly/1eW5mHC

— Unions team up to organize UFC fighters, from Law360: http://bit.ly/1JPp2tP

— Construction managers facing manslaughter charges after trench collapse, from the New York Times: http://nyti.ms/1W4n7qe

— McGinty Wins USW Endorsement in Pennsylvania, from Politics Pa.: http://bit.ly/1IR1aW2

THAT’S ALL FOR MORNING SHIFT.

CORRECTION: An earlier version of this tipsheet misidentified how the company Luxe classifies its workers.