Salient to Investors:

  • The Fed misses those who are employed who are overqualified for their job or would like to work more hours, so the significant under-utilization of labor resources is probably even more severe than currently estimated.
  • Michelle Meyer at Bank of America said we have more slack than the official statistics suggest because it is difficult to measure under-utilization.
  • Betsey Stevenson at the Council of Economic Advisers said people working over 35 hours a week fall off the radar when they are underutilized because they are considered to be full-time.
  • Accenture said that 46% of 2012 or 2013 graduates working said that their job did not require their degree, up 5% from 2013.
  • FRB of New York found that 44% of working recent grads were underemployed in 2012 in jobs not requiring a bachelor’s degree, versus 34% in 2001 and near levels last seen during the 1990-91 recession.
  • Michael Feroli at JPMorgan Chase believes we have enough good measures of slack and have not been using them well enough – any new survey questions would be of little use in the near-term because of the lack of history.
  • David Blanchflower at Dartmouth said that in time an improving economy will help take up some of that slack. Blanchflower said employees willing to work longer for the same pay also explains why wages have been stagnant.

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