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AI Summary. The structural unemployment rate fell from 7.8% to 4.8% between 1976 and 2024, with over half of the 3.3 percentage point decline driven by workforce composition shifts, particularly rising educational attainment, which alone accounts for 1 percentage point of the reduction.
Andreas Hornstein, Marianna Kudlyak, Greeshma Avaradi and Taerin Kim Federal Reserve Bank of San FranciscoCore argument: The U.S. trend unemployment rate fell 3.3 percentage points—from 7.8% in 1976 to 4.8% in 2024—with rising educational attainment alone accounting for 1.0 percentage point of that structural decline.
We find that the trend unemployment rate declined from 7.8% in 1976 to 4.8% in 2024 [Figure 1]. Roughly half of that decline reflects compositional change. Figure 2 separates the estimated cumulative change in the annual unemployment trend since 1976 into its components. The total decline was about 3.3 percentage points by 2024. Changes in workforce composition account for a little more than half of that decline. Rising educational attainment is the single largest compositional force, lowering the trend about 1pp. Figure 4 plots estimated education shares for entering cohorts of women, and these patterns are similar for male cohorts (not shown). The figure shows a steady long-run fall in the share of new female cohorts with less than high school education and a steady rise in the share with some college or a college degree. [Returning to Figure 2], changes in group-specific LFP rate trends contribute only ~0.3 pp. The remaining decline, a bit under 1pp, comes from lower group-specific trend unemployment.AI Summary. The narrowing unemployment gap between young college graduates and non-graduates reflects rising labor force dropout among non-graduates, not equal job market outcomes; the share of young non-graduates who are employed is 1.7 percentage points below pre-pandemic levels and falling, while graduates are near recovery.
Justin Fox BloombergCore argument: The narrowing education-unemployment gap among young adults reflects labor force withdrawal by non-degree holders—not diminished diploma value—as workers who stop seeking jobs are excluded from unemployment calculations.
The narrowing of [the unemployment gap btw college and non-college workers] in recent years has lent support to narratives that college diplomas are losing their value amid the rise of large language models, the purported return of blue-collar work, and other job market changes. But while it may well be that diplomas have lost value, the recent shrinking of the young-adult education-unemployment gap seems to be driven mainly by a different phenomenon. Growing numbers of young adults without college degrees simply aren’t trying to find work and thus aren’t counted in unemployment calculations. The employment-population ratio for young college grads is not far off from where it was just before the pandemic and seems as if it might be headed upward again after a sharp drop in 2023 and 2024, for non-grads it is 1.7 percentage points lower than before the pandemic and clearly trending downward.AI Summary. U.S. aerospace and electrical components manufacturing are the two largest sources of job growth in an otherwise declining manufacturing sector, driven by record airline order backlogs and surging demand for electrical infrastructure from data centers. Dedicated data center consumption of electrical equipment and components more than doubled between 2019 and
Jiaxin (Jason) He AgglomerationsCore argument: Aerospace posted a $116.7 billion trade surplus—the largest of any U.S. manufacturing industry—while leading all sectors in job growth since 2023, driven by record commercial airline order backlogs and Boeing's return to profitability and high delivery volumes.
Aerospace leads all manufacturing industries in job growth since 2023. Last year it also posted the largest nominal trade surplus of any manufacturing industry, at $116.7 billion. Driving the growth has been strong commercial and passenger airline demand, including a record-high order backlog. Boeing, the world’s leading airplane manufacturer, returned to profitability and high delivery volumes in 2025. The employment surge in the electrical components subsector tells a different story. It owes its strength to two industries: electrical equipment manufacturing and batteries, wires, cables, and miscellaneous electrical components. These are among the industries that bore the brunt of the China Shock and suffered acute decline in the 2000s. Green energy and electric vehicles likely contributed to their initial recovery, raising demand for batteries and electrical infrastructure. But their continued growth even after the cancellation of EV subsidies in 2025 points to a different, potent, and entirely unsurprising driver: Artificial Intelligence. AI’s manufacturing footprint runs the length of the supply chain. Dedicated data centers more than doubled their real consumption of electrical equipment and components from 2019 to 2024.AI Summary. A labor market operating below the unemployment level consistent with stable prices for an unusually long stretch sustains upward pressure on wages and prices, keeping inflation persistently elevated. Reducing inflation toward the 2% target requires maintaining higher interest rates until excess labor demand is eliminated.
Torsten Sløk ApolloAI Summary. The overall labor force participation rate is a misleading measure of labor market health because it does not account for age-related variation in work patterns, making it especially distorted when large population groups shift into retirement-age brackets.
Justin Fox BloombergAI Summary. Declining male labor force participation in the United States is driven by cohort-level beliefs shaped by lifetime exposure to weak male labor markets, with each generation participating less than the last at every age.
Remy Levin and Daniela Vidart National Bureau of Economic ResearchCore argument: Male labor force participation decline correlates strongly with cohort-level lifetime labor market experiences, driving persistent participation gaps across generations independent.
We propose a new channel contributing to the long-run decline in [male labor force participation] (MLFP) in the United States: changes in American men’s lifetime experiences of the aggregate male labor market have shaped their beliefs about the returns to participation, influencing labor supply decisions in ways that persist even in the face of current market conditions. MLFP and national lifetime male labor market experiences, holding contemporaneous conditions fixed, are highly correlated over time (Figure 1, Panel A). Second, the decline in MLFP is largely driven by cohort-level differences: recent cohorts participate at lower rates than previous generations at every age (Figure 1, Panel B). These patterns suggest that men’s labor market participation is the history, embedded in each cohort’s memory, of the labor markets experienced by the men around them. The effects on MLFP are stronger for experiences of same-race male labor markets, demonstrating the central role of reference-group identity, and are driven by conditions experienced during men’s formative childhood years not explained by educational attainment of subjects or their fathers. Finally, we show that lifetime male labor market experiences are correlated with direct measures of men’s personal wage and employment expectations, but not their expectations for the macroeconomy as a whole.