A few days ago we the Job Openings and Labor Turnover Survey (JOLTS) report was released for the month of april. This indicator lags some other employment data, but still can give us useful information. During April, the unemployment rate felt 4/10 of a percentage point to 6.3%, creating skepticism about how much of the drop could be attributed to a structural or cyclical component.
By using the JOLTS report and relating it to the unemployment rate we can see two things in the next chart.
First, the JOLTS report (given the linear relationship using data after the crisis) is consistent with an unemployment rate of 6.3%, suggesting that labor market slack is less compared with market assumption. Secondly, by comparing the constant term in both regressions (using data before and after the crisis), the NAIRU could have increased more than 1.0% (1.5% using this analysis). If the NAIRU was estimated at 5.0-5.5% before Lehman, the unemployment rate could be very close to its natural level of unemployment. Given how complascent markets have been about US monetary policy, we could see a shift in the months to come. Hopefully the FED will bring us some volatility.
Below you will find a couple of papers that supports this comment.
Middle-Skill Jobs Lost in U.S. Labor Market Polarization: