May the Labor Force Be With You
My second post, "Growing Labor Force Calls for More Fed Easing," is now up on Bloomberg View's "The Ticker" blog. I'm talking about how labor force growth has finally restarted after a long stall during the recession, why that is good news, and why it also creates a new public policy challenges.
Here are a few excerpts:
The American labor force is growing again. After three years of falling participation starting in 2009, this year has brought a return to the normal rate of growth seen before the recession, with roughly 150,000 joining the labor force every month...And yet, the restoration of labor force growth creates new headwinds for the recovery and new problems for policymakers. As more people look for jobs, it will become a growing problem that the economy is not creating enough...The current rate of growth in actual employment -- also 150,000 per month, on rough average -- will no longer be sufficient to bring down the total number of Americans without work. Year-over-year job creation less labor force growth has been effectively zero for the last two months, and without a significant acceleration in the rate of net job creation, the unemployment rate will stay near 8.3 percent indefinitely...For the unemployment rate to continue declining at roughly one percentage point per year as it did in 2010 and 2011, the United States would need double the rate of job creation, bringing it from 150,000 a month to 300,000 a month...The best hope for faster job creation lies in monetary policy.