Adriana D Kugler: The rebalancing of labor markets across the world

Thank you, Tiago, and thank you for the opportunity to speak to you today. I am delighted to be at the Bank of Portugal, among friends, including Governor Centeno, and to be speaking at a conference focusing on matters I deeply care about-monetary policy and labor markets. Before I became a monetary policymaker, a large share of my work as an academic researcher addressed the effect on labor markets from policy choices such as payroll taxation, employment protections, occupational licensing, and unemployment insurance (UI). I was able to apply some of these insights in my work as the chief economist at the Department of Labor, analyzing the labor market and supporting research on policies and their effectiveness.

And, of course, labor markets are central to carrying out the Federal Open Market Committee's (FOMC) dual mandate of maximum employment and stable prices. Recently, labor supply and demand in the United States have been roughly in balance, and the unemployment rate has been running close to the estimates of FOMC participants for its longer-run rate, which is consistent with the Committee's maximum-employment goal.

Today's employment report for February corroborates this view. The net number of new jobs created was 151,000, not too far from the 177,000 average of the previous six months. The unemployment rate was 4.1 percent, still in the narrow range between 4 percent and 4.2 percent that it has remained in since last summer. Labor force participation was 62.4 percent-likewise within the range of values observed in the past year. Consistent with this stability and evidence of balanced labor supply and demand, average hourly earnings are up 4 percent in the past 12 months, and with strong productivity growth in recent quarters, I do not believe wages are a significant source of inflation pressure.