Fed Study of Labor Participation Finds U.S. at Full Employment

The U.S. labor market doesn’t have much more room to tighten, according to a new study from the Federal Reserve Bank of San Francisco that examines trends in the number of Americans who are either working or looking for jobs for clues on remaining slack.

“Our estimates indicate that the aggregate labor force participation rate is at its trend as of 2018,” the regional Fed bank concluded in an Economic Letter published Nov. 19. “Combined with the low unemployment rate, this argues that the U.S. labor market is operating at or beyond its full potential.”

Labor force participation measures the ...