Will work for money — but only the right amount of money
US unemployment is at a 16-year low and job openings near a record high, but the pay level at which someone will accept a job remains too low, writes Conor Sen
The US unemployment rate is hovering around a 16-year low. Job openings are near a record high. So why is it possible to argue that the economy is not at full employment? One potential answer: there are still plenty of people who would work if only they could find a job that paid enough. A new survey from the Federal Reserve Bank of New York sheds valuable light on the "reservation wage" — the lowest level of pay at which someone will accept a new job. It shows that the threshold has fallen over the past nine months — a period during which a lot of people not typically counted in the unemployment rate have actually taken jobs, driving up the employed share of the population. This strongly suggests that pay is playing a significant role in determining whether people choose to work, and that more workers are available at the right price — evidence of what economists would call "slack" in the labour market. But I’d say slack is the wrong term. What’s really going on is a stand-off betw...
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