A Participation Problem
Macro
Sep Jobs Report Shows Strong Employment With Low Participation
(Green Line) LF / Pop: Fraction of population that is participating in the labor force
(Orange Line) E / Pop: Fraction of the population that is employed
(Blue Line) E / LF: Fraction of labor force participants that are employed
Interpretation
Smaller fraction of population is participating in the labor force. Witness the drop in LF/Pop (aka LFPR)
But among those who are ready, willing, and able to work (aka the Labor Force), employment is high.
Interestingly, it doesn’t seem like the drop in participation is drive (entirely) by discouraged workers exiting the LF.
So, we might actually have reasonably strong labor demand, but labor supply is constrained bydemographics, immigration, etc…