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Measuring Labor Market Slack

CBO – Presentation by Wendy Edelberg at the Peterson Institute for International Economics conference on Labor Market Slack: Assessing and Addressing in Real Time

“In CBO’s view, the current slack in the labor market consists of multiple elements, including:

  • The labor force participation rate is well below what CBO estimates would be achieved if the demand for workers was stronger.
  • The unemployment rate is above CBO’s estimate of the natural rate.
  • The share of part-time workers who would prefer full-time work is significantly higher than before the recession. Continued slow growth in compensation is an important signal that significant slack remains. Measuring slack is quite difficult, and the current amount of slack could be a good deal larger or smaller than CBO estimates.”

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