Leading economists said we'd need higher unemployment to tame inflation. Here's why they were wrong.
By Adam Ozimek
"...the unemployment rate doesn't really capture everyone who doesn't have a job; it excludes people who aren't looking for work at all. This dividing line makes sense for retired people, full-time students, and others who genuinely don't want work—it wouldn't make sense to call these people unemployed. But retirees and students are not the only adults who are out of the labor force. There are also people who might want a job if the opportunities were good enough. Potential workers like these are precisely who could help alleviate labor-market pressures. More people entering the labor force would mean more workers to fill job openings.
The most recent economic data make clear that the unemployment rate was significantly undercounting the pool of available workers. Even as the official number remains pinned to historical lows, 4 million workers have found jobs over the past year. The labor market was in better shape than many experts thought. Inflation and wage growth have both been slowing down. This did not require a multiyear span of high unemployment, as Summers suggested; to the contrary, the economy keeps adding jobs."
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