Tackling the Labor Market Debate — This Is More a Demand than Supply Story

The widespread view that the slow pace of job growth is primarily from falling labor supply ignores the clear signs of decay in labor demand.

Key Takeaways

• Falling labor demand, not just falling labor supply, is a key factor keeping job growth low — a view we hold in sharp contrast to some Fed hawks

• The pool of available unemployed or job-seeking workers has grown by +8.1% in the last year, and represents a large share of potential workers (well-above the pre-pandemic level)