3 Conclusions
The return to essentially normal unemployment conditions is an important milestone for
the U.S. labor market. The period of abnormal difficulty for new job-seekers is over, and
the legacy of long-duration unemployment appears likely to work itself out soon. In that
respect, the labor market is performing well, especially in comparison to the markets of many
other countries. No special policies related to unemployment and job-finding are indicated
at present.
The decline in labor-force participation is one of the factors contributing to the stagnation
of the earnings of American families, especially those not enjoying the rising wages of the
highly educated. But a study of the data on the decline does not suggest the desirability
of policy changes focusing on reversing the decline. In particular, the data do not seem to
support the view that the social safety net is discouraging participation—participation by
those in low-income families has generally risen, not fallen. That said, the case for structural
reform of some parts of the safety net, notably disability programs, remains strong, because
reform promises payoffs apart from stimulating participation.
