Is There Still Slack in the Labor Market?
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.
