We May Well Not Be at Full Employment Yet...
In the context of overall labor-market utilization trends, the rise in the household-survey estimate of the unemployment rate in December relative to November is worth a note:
- First, the rise in the unemployment rate is due predominately to yet another increase in labor force participation. It's not that people found it harder to find and keep jobs—it's that people who had thought it would be hard concluding that it will be easier, and so starting to look.
Second, once again the flow of workers from out of the labor force directly into employment without even a month in which they say they are searching for a job continues to be an important feature. This, as has been the case since this recovery started in late 2009, means that the estimated labor force is not the real labor force, and since that is what goes in the denominator of the unemployment rate the estimated unemployment rate is not the measure of the labor market tightness that you should be using.
Third, taking 2007 as a benchmark for the prime-age labor-force participation rate suggests that there is an extra 1.3% of workers ought there who could be relatively easily pulled back into the labor force—if the labor share of income were high enough.
Fourth, do not overestimate the importance of this month's data point. Our seasonal adjustment factors are not precise and are not well escalated. The coming of Christmas is a big deal who’s labor market, and subtracting its effects from the monthly change in order to try to get a read on business cycle trends around the cusp of the year is always a hazardous enterprise.
Second,
https://beta.bls.gov/dataViewer/view/timeseries/LNS12300060
#labormarket #equitablegowth #highlighted #monetarypolicy
