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Is There Still Slack in the Labor Market?

Author

Listed:
  • Daniel Aaronson
  • Scott Brave
  • David Kelley

Abstract

Based on recent population and labor force projections, we estimate that payroll employment remained about one million jobs below its trend as of April 2016. Given an average pace of roughly 200,000 jobs added per month so far this year, this implies that labor market slack is likely to persist until late 2016. Considerable uncertainty surrounds this estimate, however, especially with respect to labor force trends. An alternative calculation that assumes a steeper decline in trend labor force participation driven by shifting demographics suggests that slack could persist for up to an additional year.

Suggested Citation

  • Daniel Aaronson & Scott Brave & David Kelley, 2016. "Is There Still Slack in the Labor Market?," Chicago Fed Letter, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhle:00047
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    Citations

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    Cited by:

    1. John C. Williams, 2016. "Assessing the New Normal(s). Speech to the Federal Home Loan Bank of San Francisco’s 2016 Member Conference, San Francisco, California, October 21, 2016," Speech 171, Federal Reserve Bank of San Francisco.
    2. John C. Williams, 2016. "Longview: The Economic Outlook. Speech to the Anchorage Economic Development Corporation, Anchorage, Alaska , August 18, 2016," Speech 168, Federal Reserve Bank of San Francisco.
    3. John C. Williams, 2016. "Longview: The Economic Outlook," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    4. John C. Williams, 2017. "Looking Back, Looking Ahead," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    5. Anat Bracha & Mary A. Burke, 2016. "Who counts as employed?: informal work, employment status, and labor market slack," Working Papers 16-29, Federal Reserve Bank of Boston.
    6. John C. Williams, 2016. "Whither Inflation Targeting? Speech to the Hayek Group, Reno, Nevada, September 6, 2016," Speech 169, Federal Reserve Bank of San Francisco.

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