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The Importance of Strong Labor Demand
Report

The Importance of Strong Labor Demand


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Editorial Rating

8

Qualities

  • Controversial
  • Analytical
  • For Experts

Recommendation

By most metrics, the US economy is expanding, and Americans are reaping the benefits of job growth. So why are so many people working more hours but still not getting ahead? One reason may be that labor demand is less robust than it should be. Economist Jared Bernstein offers some provocative ideas on tackling the problem in this astute report, but even those may not be enough to reverse the trend. getAbstract recommends this technical analysis to economists and policy experts for its nuanced view of why so many Americans continue to struggle.

Take-Aways

  • By one measure, traditional US labor market statistics are often far too rosy and have been for several decades. 
  • Labor market “slack” measures the gap between the jobless rate and the “natural rate of unemployment,” or the lowest unemployment rate that economists think should prevail in a stable inflationary environment. 
  • Slack occurred in about 70% of all quarters between 1980 and 2017, compared to roughly one-third of all quarters between 1949 and 1980. 

About the Author

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities at the Hamilton Project of the Brookings Institution.