How tight is the US labor market? The answer is
important to the prospects for accelerated growth in employment and
output in the year ahead. If the market is already tight, efforts to
create more jobs are likely to push up wages rather than pull in new
workers.
The unemployment rate, which fell below 5
percent in the fourth quarter, suggests that the market is already
tight. The Federal Reserve estimates that "full employment" (or
technically, the Nairu)
means a measured unemployment rate of about 4.8 percent, a target
already reached. However, data on usual weekly earnings of wage and
salary workers, released Tuesday by the Bureau of Labor Statistics, suggests that there is still slack in the labor market. . . . .
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