How tight is the US labor market? The answer is important to the prospects for accelerated growth in employment and output in the year ahead. If the market is already tight, efforts to create more jobs are likely to push up wages rather than pull in new workers.
The unemployment rate, which fell below 5 percent in the fourth quarter, suggests that the market is already tight. The Federal Reserve estimates that "full employment" (or technically, the Nairu) means a measured unemployment rate of about 4.8 percent, a target already reached. However, data on usual weekly earnings of wage and salary workers, released Tuesday by the Bureau of Labor Statistics, suggests that there is still slack in the labor market. . . . .
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