In the latest Topic Talks, NEPC's Jenn Appel breaks down the latest trends in the labor market. Check out our YouTube channel at https://www.youtube.com/c/NEPCLLC for more.

1. P R O P R I E T A R Y & C O N F I D E N T I A L
TOPIC TALKS
JUNE 2022
Jennifer Appel, CFA, Investment Director, Asset
Allocation
WHAT’S GOING ON
WITH THE LABOR
MARKET?

2. HEADLINE LABOR MARKET DATA HAS RECOVERED
THE U.S. UNEMPLOYMENT RATE
Notes: Shaded areas represent U.S. economic recessions; data as of May 31, 2022
Sources: U.S. Department of Labor, ECRI, FactSet
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
1950 1960 1970 1980 1990 2000 2010 2020
U-3 Unemployment Rate
U-6 Unemployment Rate

3. THE DETAILED DATA SHOWS MORE VARIATION
STATE-LEVEL UNEMPLOYMENT RATES (%)
Source: U.S. Department of Labor, FactSet, NEPC

4. TAKING A CLOSER LOOK AT THE U.S. POPULATION
Notes: *Other may include full-time college students, active-duty military, and institutionalized individuals. Total may not add due to rounding.
Sources: U.S. Department of Labor, Conference Board U.S., FactSet
In the Labor Force
Not in the Labor Force
10% Employed Part-Time
50% Employed Full-Time
2% Unemployed
17% 65 Years or Older
9% Disabled
2% Want to Work
2% Stay at Home Parents
7% Other*

5. THE LFPR REMAINS BELOW PRE-PANDEMIC LEVELS
Labor Force
Participation Rate
(LFPR)
Notes: *Official definition specifies civilian, non-institutionalized working-age population. Data as of 05/31/2022
Sources: U.S. Department of Labor, FactSet
Employed + Unemployed
Working-Age
Population*
62.2%
55.0%
57.5%
60.0%
62.5%
65.0%
67.5%
70.0%
1948 1958 1968 1978 1988 1998 2008 2018

6. THE LFPR THROUGH DIFFERENT LENSES
UNDERLYING DATA HIGHLIGHTS DIFFERENCES
Notes: Long-term averages calculations begin in 1980. Education long-term average calculated since 1991 due to data availability.
Sources: U.S. Bureau of Labor Statistics, FactSet
Gender
Age
Education
68.0%
57.0%
Male
Female
38.9%
82.6%
55.3%
55+
25-54
16-24
73.3%
63.5%
56.8%
44.0%
0% 20% 40% 60% 80% 100%
Bach+
Some College
High School
Below High School

7. WHAT’S DRIVING THE DECLINE IN THE LFPR?
CYCLICAL AND SECULAR FACTORS INFLUENCE THE WORKFORCE
Notes: Shaded areas represent U.S. economic recessions; data 05/31/2022
Sources: U.S. Department of Labor, ECRI, FactSet
Demographic Trends
Retirement Rates
Opioid Epidemic
Immigration
Lifestyle Affordability
Automation
Skills Mismatch
Educational
Attainment
CIVILIAN EMPLOYMENT TO WORKING-AGE POPULATION RATIO
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
50%
54%
58%
62%
66%
1950 1960 1970 1980 1990 2000 2010 2020

8. 39.3
-80.00
-60.00
-40.00
-20.00
0.00
20.00
40.00
60.00
1977 1982 1987 1992 1997 2002 2007 2012 2017
THE INFLUENCE ON TODAY’S ECONOMY
THE LABOR MARKET DIFFERENTIAL
Notes: The Labor Market Differential represents the share of consumers reporting jobs that are “plentiful” minus those reporting jobs are “hard to get”.
Data as of 05/31/2022
Sources: Bureau of Labor Statistics, Conference Board U.S., Federal Reserve Bank of Atlanta, NFIB, FactSet
The Labor Market Differential
provides insights on tightness in
the labor market and can be a
useful predictor of wage growth

9. RISING WAGES ARE BUILDING MOMENTUM
3-MONTH MOVING AVERAGE OF OVERALL WAGE GROWTH
9
Sources: Federal Reserve of Atlanta, FactSet
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
1997 2000 2003 2006 2009 2012 2015 2018 2021

10. ▪ A lower LFPR can negatively influence trend economic growth rates
given the negative impact on production and aggregate spending
▪ Structural impairment in the LFPR can affect long-term socio-economic
and political stability
▪ Current labor market data is confounding and the long-term influence
of these dynamics remains unknown – leaving us with many
unanswered questions:
‒ Will the “Great Resignation” be a longer-lived trend?
‒ Did the pandemic start a structural shift in the labor market?
‒ How will labor market dynamics influence the inflationary environment?
THIS DYNAMIC CAN HAVE CASCADING EFFECTS
FINAL THOUGHTS AND CONSIDERATIONS

11. Past performance is no guarantee of future results.
Information on market indices was provided by sources external to NEPC. While NEPC has exercised
reasonable professional care in preparing this report, we cannot guarantee the accuracy of all source
information contained within.
The goal of this report is to provide a basis for substantiating asset allocation recommendations. The opinions
presented herein represent the good faith views of NEPC as of the date of this report and are subject to change
at any time.
All investments carry some level of risk. Diversification and other asset allocation techniques do not ensure
profit or protect against losses.
NEPC DISCLOSURES