Is Labor Reaching Its Limit In Supplying Its Labor?


The graph implies that as labor share falls, labor is less inclined to supply its labor… and the natural rate of unemployment rises. (link to Fred graph)

Since 1947, the unemployment rate falls to a level consistent with implied supply & demand limits set by labor share. The US now seems to be reaching the implied supply limit with a low labor share index around 98.

  • Will the plot line end up respecting the implied supply limit of labor?
  • Will the unemployment rate continue to fall only as long as labor share does not trend downward?
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