Employment and Labor Markets

Higher employment raises households’ incomes, raises federal revenues, and reduces federal spending for certain programs. CBO analyzes the causes and consequences of unemployment and other developments in labor markets. The agency also examines the effects on labor markets of federal policies in current law and proposed policy changes.

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    This report examines how various demographic factors relate to labor force participation, how economic conditions are likely to affect that rate over the next decade, and what keeps people from participating in the labor force.

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    CBO analyzes the impact of retirement benefits on the federal budget and on the compensation, recruitment, and retention of its employees. It assesses the short-term and long-term effects of potential changes to those benefits.

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    From 2008 to 2015, male veterans ages 22 to 44 who left active-duty service after September 2001 had experiences in the labor market similar to those of civilian men, although the youngest veterans had somewhat higher unemployment rates.

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    During the 2011-2015 period, the difference between the wages, benefits, and total compensation of federal civilian employees and those of similar private-sector employees varied widely depending on the employees’ educational attainment.

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    Canceling scheduled changes to overtime regulations before enactment would lower employers’ payroll and compliance costs and increase profits. The cancellation would also lower employees’ pay but increase real family income, CBO finds.

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    In 2014, 16 percent of men in the United States between the ages of 18 and 34 were jobless or incarcerated, up from 11 percent in 1980. Those numbers and related longer-term trends have significant economic and budgetary implications.

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    Raising the minimum wage would increase family income for many low-wage workers, moving some of them out of poverty. But some jobs for low-wage workers would probably be eliminated and the income of those workers would fall substantially.

  • Report

    Since the recession ended in June 2009, employment has risen sluggishly and the unemployment rate has fallen only partway back to its prerecession level. This CBO report discusses the reasons for the slow recovery of the labor market.

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    Small firms both create and eliminate jobs at higher rates than large firms do. Although small firms account for a disproportionate share of net job growth, that greater growth is driven primarily by new small firms.

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    The rate of unemployment in the United States has exceeded 8 percent since February 2009, and CBO projects that it will remain above 8 percent until 2014.