Searching for Maximum Employment

Albert, Sarah; Valletta, Robert G.

Journal Article

Searching for Maximum Employment

Abstract: How well the economy is progressing toward the Federal Reserve’s goal of maximum employment is reflected in a range of indicators that evolve over time. Beyond the unemployment rate, two key metrics of labor market health are the labor force participation rate and the employment-to-population ratio. The aging of the population is reducing the levels of both measures, implying that they are unlikely to return to pre-pandemic highs. However, these two indicators remain well below their demographic trends, and analysis suggests that they will not recover to trend until 2024.

Keywords: employment; unemployment; labor force participation rate; employment-to-population ratio; demographics;