James Ketcheson is a Principal Economist in the International Economic Analysis Department (INT). He is responsible for monitoring developments in the US economy. Prior to this role, James held various positions at the Department of Finance Canada. James completed his M.A. in Economics at the University of British Columbia, and is a CFA charterholder.
This note explores the drivers behind the recent increase in the US participation rate in the labour market and assesses the likelihood of a similar gain in Canada. The growth in the US participation rate has largely been due to a pickup in the participation of prime-age workers following a post-recession decline.
This note examines the relatively subdued pace of wage growth in Canada since the commodity price decline in 2014 and assesses whether the weakness is attributable to cyclical (e.g., labour market slack) or structural factors (e.g., resource reallocation and demographic change).
In this note, we provide a brief comparison of the recent developments in the labour markets in Canada and the United States. Our analysis indicates that slack remains in the Canadian labour market, while the US labour market is close to full employment.
Despite the US unemployment rate being close to estimates of the non-accelerating-inflation rate of unemployment (NAIRU), measures of underemployment remain elevated, which could be an indication of remaining labour market slack. The shares of involuntary part-time workers and long-term unemployment are high relative to the current stage of the business cycle, suggesting available labour inputs are being underutilized.