Are jobs going to people who aren’t looking for them?

After a horrible decade or so, America’s unemployment rate is finally back down to around 4%, in the vicinity of what would normally be considered ‘full employment’. But is there still some slack in the US labour market? The Economic Policy Institute thinks so, and Josh Bivens at EPI has produced this graph to support their argument: If the number of employed people rises, those extra workers can come from one of two places. Either the new workers were previously actively looking for a job, in which case they were “unemployed”, or they were out of work and not actively looking for a job, in which case they’re considered to have been “not in the labour force.” The EPI chart shows that in recent months, over 70% of newly employed people have come from the ranks of those who were not in the labour force – the people who were out of work, but not actively looking for a job.

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